Basil, this results from an agreement between the MPAA and most DVD player manufacturers. It supposedly lets the MPAA coordinate movie releases between countries (and maximise their profits at the inconvenience of todays international user). It doesn't really have anything to do with Microsoft (though MS wholeheartedly supports it).
DVD player manufacturers have always been lukewarm about region coding which is why it is usually trivial to bypass. Effectively, all it does is annoy legitimate consumers. Needless to say, the studios are not happy with this and are trying a new wrinkle called is Regional Coding Enhancement(RCE) - this a digital "enhancement" added to some Warner Bros and Columbia DVDs to stop region 1 (R1) DVDs from playing on Region-free DVD players.
Region coding has nothing to do with DRM content protection as such (you could have bought the authentic DVD perfectly legally outside the region where you live). Many view region code enforcement as a violation of WTO free trade agreements or competition law. The Australian Competition and Consumer Commission has warned that DVD players that enforce region coding may violate the Trade Practices Act. The government of New Zealand has also made a similar ruling.
So you're kinda off-topic actually...