it is used by RipIt (http://thelittleappfactory.com/ripit/) 
With a doubleclick the DVD.app starts with the movie in it. 
It is just a container with the normal ts_folder included.

Here some text from the FAQ:

"RipIt uses a .dvdmedia extension. This is a neat bundled package of all your audio and video files which plays with your Apple DVD player. In the RipIt menu under preferences you can uncheck the box for 'use .dvdmedia extension' and you'll get all your audio_ts and video_ts files unbundled. This is recommended if you want to use burning software to put the rips back onto blank DVDs. "

Hope this helps.

Greetz

Thomas

Last edited: 21.03.2010 18:24:55