HD DVD movies are presented in native high definition (720p/1080i/1080p) which gives you far more detail than you have ever seen in a movie before. The difference in visual quality between HD DVD and regular DVDs is pretty remarkable and you'll see a difference in the first movie you watch.
HD DVD also offers another great feature in that to change settings, or access the main or chapter select menu, the movie doesn't have to stop. It will play in the background while you are in the menus, which is very smart, and very cool, and very useful. It can also do things like play director commentary or special features in a Picture-In-Picture window while you are watching the movie.
The HD DVD drive will also allow you to upscale your regular DVDs to 720p/1080i/1080p if you have an Xbox 360 Elite system with HDMI or use the Xbox 360 VGA cable. Your older DVDs won't look as nice as HD DVDs since they aren't natively high-def, but they will look very nice which is an added benefit of the HD DVD drive.