It is wholly possible to have DVD media play on a CD, you just have minutes of video instead of hours. The same way you can have Blu-ray media play on a DVD, you just get minutes instead of hours.
A normal DVD set top player will not be able to play the Blu-Ray media format. No one ever argued that once. DVD set top players will not have the built in codecs for it. Just like how some DVD set top players will play DIVX CD's/DVD's and some won't. But if you have a DVD player on a computer that has the proper codecs and player that can reckognize the Blue-Ray media format, you can play Blu-Ray video from a DVD without any issue on a Blu-Ray player since it has the codecs..
When I only had CD's and had wanted to burn .vob video files from an old DVD, I was able to copy it to the CD and watch it at full DVD quality.
Computers, and DVD players have this thing called RAM. They read the data and then store it in RAM and then play it from RAM since it is faster. Even Blu-Ray players use this mystical thing. The read process on any spinning disk is often too slow or too inconsistent to stream directly off the spinning medium and directly to the video output. If the read happens to miss a single bit, it will have to wait until next rotation to read that single bit.
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