A quick primer on what RealDVD actually does: the $30 Windows-only program essentially makes a 1:1 copy of a DVD, with the resultant file playable only within RealDVD. (You can’t play the file in VLC, nor can you burn the file and have it play on a standard DVD player, for example.) That means if the DVD you’re copying is 7GB in size, the resultant RealDVD file will also be 7GB in size. Think of it like making a straight ISO of a disc, but one that still contains all the CSS copy protection. Real did this to appease the Hollywood studios: it can’t be seen producing a commercial application that strips out Hollywood’s precious copy protection, lest it be sued.
But RealDVD takes copy protection one step further. In addition to keeping CSS (et al.) intact, Real adds another layer of DRM onto the RealDVD file. This is done, presumably, to prevent people from sharing RealDVD images with each other. If Biggs copies 27 Dresses using RealDVD, he won’t be able to give me his RealDVD file of the film.
And if you were wondering just who RealDVD is aimed at, look no further than what BusinessWeek had to say about it a few days ago. Clearly Real is going for the crowd that uses computers as nothing more than tools to get work done; saying, “Well, Program X can copy DVDs, remove CSS, convert to h.264 and do your laundry” may well be true, but you try explaining that to the guy in a suit who thinks the term “command prompt” refers to a military maneuver.
In any event, it’s out now. Go crazy.