According to Digital Foundry's "highly placed development source", the maximum space allocated to game data on the current disc format is just 6.8GB out of a maximum of 7.95GB on a standard dual layer DVD, with over 1GB dedicated to a DVD-Video partition that also contained anti-piracy security sectors. Support for the new format will come along with the next system update for the console and it basically frees the aforementioned locked-off portion of the disc.
The idea, apparently, is to lift some limitations on graphics and game size by optimizing how the video partition and anti-piracy system work. To participate on the beta, U.S. based Xbox 360 owners must register at the Microsoft Connect site with their Windows Live ID connected to their Xbox Live Gamertag. Those selected will get a free copy of Halo: Reach, in a disc using the new format, and Microsoft will presumably collect performance information from their systems.