DRM is an acronym for Digital Rights Management (or as the Free Software Foundation describes it, Digital Restrictions Management) that prevents unauthorized access to various digital works. Although this has been around for a while, it hasn't become an issue in our geek computer world until Windows Vista, which can prevent protected media from playing if there are unauthorized programs running.
Here it is important to define what "unauthorized" means. I'm not completely certain, however I believe this is probably determined by either a white-list or a black-list. Either way, this is completely subjective to Microsoft's point of view and they can manipulate this to their whims. Not only is this restricting the freedom of the users to use the software they want to use, but it also gives Microsoft an unfair advantage in the competitive market. Knowing Microsoft, they will probably use this to their full advantage should a media player come to rival Windows Media Player.
Even more appalling is the existence of laws such as the Digital Millenium Copyright Act, where the government can back the wishes of large corporations by making things like reverse-engineering or DRM circumvention illegal unless you fall under their narrow category of exceptions (ie. You pay them lots of money). It is one more action showing to the rest of the world that America does not care about the freedom of it's citizens, only it's corporations.
One great thing about Ubuntu (or Linux in general) is that you don't have to worry about all this garbage (unless you live in the United States and are caught sharing files, then you might get sued by the RIAA or Metallica or somebody). Totem just plays whatever I want it to play, with no fuss. You have to manually install all the codecs for things like MP3, XviD or DivX, but fortunately (unlike Windows Media Player) the little codec searcher actually works.