S-Video is just another way to transfer video from your DVD player to your TV. It can transmit a better resolution than an RF (coaxial) or composite cable (yellow video), but worse than component (red/blue/green), VGA (d-sub 15), or HDMI. Of course, if your TV cannot display a better resolution than coaxial or composite, it doesn't really matter.
As for why it's does seem to work, what video cable are you currently using and was it still connected when you connected the S-Video cable? Did you remember to change the TV's input to s-video?