The name "Blu-ray" comes from the blue laser being used to read and write. There are GaN (Gallium Nitride) diodes that produce photons of 405nm directly. 400nm is the wavelength of the violet component of the visible spectrum so the "blue laser" actually appears violet to the human eye. By decreasing the wavelength from 650 and 780nm used for DVDs and CDs respectively, and increasing the aperture from 0.60 to 0.85, the laser can be focused to a smaller area. Hence, more data can be stored in the same amount of space.
In BDs, the distance between the surface of the disk and the surface upon which the data is actually recorded is 0.1mm. This is 1/6 times the distance for a regular DVD. Since the discs are made of plastic, the incident angles can change a little due to disc warping. To check this problem, the NA is increased (to an extent) and the cover layer's thickness is decreased.
Typical BDs can store 25GB if they are single layered, and 50GB if they are double layered.
"Double-layered" refers to the presence of two recording layers inside the protective cover layer. Each recording layer can store 25GB of data. Pioneer Corp. recently developed a BD with 20 recording layers which allows it to store 500GB of information inside a single BD!
Structure of single-side, double-layer BD
And finally, regarding the popularity of BDs, they are mostly used to store HD videos since the regular DVDs can only store Standard Definition (SD) videos. When HDTVs become widespread, BDs are expected to replace DVDs. For the time being, companies such as Sony, Panasonic, Phillips, Samsung, Pioneer and LG have developed BD drives that are compatible with BDs and DVDs both. This is known as Backward Compatibility and is a measure to ensure that once newer media like BDs become popular, the older storage media do not become obsolete.
Photographs courtesy : http://panasonic.net/blu-ray/technology/