It's all about bitrate: How much data is packed into a file, described as bits per second. Generally speaking, a higher bitrate translates into higher quality audio and video, though quality can also be affected by codec—the encoding and compression technique that was used to make and read the file—so bitrate is not an absolute mark of quality, but it's still a very good indicator.
You're probably most familiar with this bitrate business when it comes to ripping your CDs. When you shove a CD into your computer, your ripping program will ask what format you want and what bitrate you want. A song ripped at a higher bitrate will sound better, with more presence and detail, but it does take up more space.
The same principle applies with video, though it's actually a bigger deal, because it's easier to see quality differences in video than it is to hear differences in audio. The bits make a huge difference when you get into fast moving stuff like sports or action movies—to be frank, they'll look like splattered, smeared **** in highly compressed low-bitrate vids. This chart below, expertly crafted by George Ou at ZDNet provides a solid starting point for comparison, with average bitrates of most digital video available.