"Stands for "Digital Video Interface." DVI is a video connection standard created by the Digital Display Working Group (DDWG). Most DVI ports support both analog and digital displays. If the display is analog, the DVI connection converts the digital signal to an analog signal. If the display is digital, no conversion is necessary. There are three types of DVI connections: 1) DVI-A (for analog), 2) DVI-D (for digital), and 3) DVI-I (integrated, for both analog and digital). The digital video interface supports high bandwidth signals, over 160 MHz, which means it can be used for high resolution displays such as UXGA and HDTV. You may find DVI ports on video cards in computers as well as on high-end televisions."
It lets you hook up your monitor (only with LCDs) to your computer with a DVI cable if your video card has a DVI port, which results in better picture quality.