Digital Restrictions Management
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DRM, also known as Digital Restrictions Management and Digital Rights Management describes a range of measures to restrict the ability to copy files protected by DRM.
DRM files are typically protected by storing some kind of key on your computer, and requiring that programs use this key to use the file. Only closed source programs trusted by the maker of the file can access this key: often this includes Windows Media Player and iTunes.
VLC, like all open source media players, cannot play protected files.
Circumventing DRM restrictions may be illegal where you live (for example, see the DMCA).
Sometimes the term DRM is used to refer to digital watermarking (which hides data which can identify where the file originates) or copy protection.