DVDs are divided into regions shown below, the main original reason for this was to prevent importing of films from other countries.
1) Region 1 :USA & Canada
2) Region 2 :Europe & Japan
3) Region 3 :The Orient
4) Region 4 :Australia and New Zealand
5) Region 5 :Asia and Africa
6) Region 6 :China
Region 7 :Reserved
Region 8 :Special International (Airlines, Cruise Ships)
The reason the Motion Picture Entertainment Group (MPEG) in the USA wanted to control the release of movies around the world using DVD region codes was, because movies get released at different times around the globe and if there wasn't some deterrent they believed that people would stop going to see as many movies.
So they introduced regions the idea being that a R2 UK/Europe disc can not be played in the US or in Oz, and vice-a versa.
However as with most `blocks' there was soon many ways to get round this and they can be altered without to much bother if you so wish.
In recent times the regions are almost forgotten about as most players are now region free or multi-region which allows you to play DVDs from everywhere.
PC DVD ROM drives are often still restricted, you normally have 5 chances to select the region and then the drive 'locks' on the last region selected. The only way round this is to 'flash' the drive by using an updated firmware or to use software to by pass the drives limits.