Movie screens are rectangular. TV screens are square. (Or at least most of them are; HDTVs are changing this rapidly.) When you transfer a rectangular image to a square TV set, it doesn't fit. There are two options. One is to cut off the sides of the picture. This is what they mean when they say fullscreen. Yes, the picture fills up your TV screen, but you are missing important information on the sides. You can actually be losing 40-50% of the image! This is especially detrimental when watching an epic film like The Lord of the Rings. Those massive battle scenes don't have the same scope because you're literally not seeing half the participants. It makes a difference, robbing the film you are watching of its majesty and grandeur.
The other option is to shrink the rectangular picture down so that it fits in the center of the square screen. Black bars fill in the space above and below the image. This is widescreen. The image is a little smaller (unless you have a big screen TV) but - and this is vitally important - you are seeing the exact same image you'd see in the theater. Unlike fullscreen, no part of the picture is lost. Some people claim not to like the black bars at the top and bottom, but look closely the next time you go to the movies in a theater; the screens all have black material around the edges. Same principle.
A DVD labeled as Widescreen Anamorphic contains video that has the same frame size in pixels as traditional fullscreen video, but uses wider pixels. The shape of the pixels is called pixel aspect ratio and is encoded in the video stream for a DVD disc player to correctly identify the proportions of the video. If an anamorphic DVD video is played on standard 4:3 television without adjustment, the image may look horizontally squeezed.
DVDs with a 16:9 aspect ratio are typically labeled Anamorphic Widescreen , Enhanced for 16:9 televisions , Enhanced for widescreen televisions , or similar, although currently there is no labeling standard. Otherwise, the movie will only support the standard full-frame display and will simply be letterboxed, or panned and scanned for 4:3 screens.
