A CD-ROM can hold up to 700MB (megabytes), while a DVD ROM can hold up to 4.7GB (gigabytes, one gigabyte = 1024, megabytes). CD-ROMs are slightly cheaper to manufacture.
A 'rom' becomes illegal if it is transferred to a medium that it is not licensed for. So a NDS ROM is legal while it is on its original NDS Gamepak, a DVD's contents is legal as long as it remains on...