HD DVD's are basically the same as your standard DVD's however, they store a lot more information.
They store information on microsopic pits on the the disc. A red laser shines onto the bumps which is basically encoded data. The bumps reflect the laser's light to a sensor. Electronics within the DVD player read the information from the sensor as a digital signal.
HD DVD's contain a bumpy layer that reflects light. They are they same size but there are three things that differ, these are, the pit are smaller and closer together, they use smaller wavelength lasers and finally the use a more efficient compression to cut down the files they store.