First off, the Xbox 360 plays DVD movies right out of the box. You don't have to purchase anything extra to watch them. You control everything with the Xbox 360 controller or an optional remote.
The second improvement is that the Xbox 360 plays movies in progressive scan (480p). If you have an HDTV or an EDTV, you'll get a much sharper picture when you watch movies with your Xbox 360.
It has to be noted, however, that the Xbox 360 shouldn't really be used as a primary DVD player. A dedicated DVD player offers more features, better image and sound quality, and you can get a decent one with progressive scan for around $50. The Xbox 360 works as a DVD player in a pinch, but I recommend getting a real DVD player if you plan on watching a lot of movies.