Note that it's called 480p, 720p, 1080p because it follows the height pixels of your resolution.
Your PC has this resolution, let's say for example you have a 17 inch pc, which has the most common resolution of 1440x900, means you can play 720p videos.
If you don't own an HDTV / LCD TV ( which i suggest you buy now ), and still has those old 26 inch standard tv's, it's most common that their resolution will be below 720x480. Having anything below 720 x 480 is called the SD ( Standard Definition ). DVD videos uses this resolution.
However, most videos rendered perfectly at 480p is considered as Enhanced Definition TV (EDTV)
DVD players / receivers even with HDMI ( High Definition Multimedia Interface ) capablity can't play HD videos. It can only play up to 480p as EDTV.
HDMI only upscales a dvd quality video to 720p or 1080p, which basically just stretch your videos.
What you need are HD media players like the most popular one which is Western Digital's Live HD Media Player. It can play all your data download videos such as .avi divx, mp4's, mkv and mpeg. One problem is that this is only for those who downloads, because it doesn't have any CD/DVD/Blu Ray drive. You would also need an external hard drive that will be connected via USB port.
Divx is the kind of codec that enables .avi video files to play on your dvd players, most newly distributed ones are capable of playing divx files, you can check the logo of your player.
However i still suggest this is better than buying a Blu Ray player which could cost 15k plus Blu Ray Movies which are like 1,500 pesos up.
Playstation 3 also serves as the best alternative Blu Ray Player so if you own one, you can hook it up to your HDTV and DVD receivers and have it as your HD player.