Basically this means that Longhorn may not play bought premium video content if it believes your monitor isn't secure enough. The article states the content providers will be able to make the final decision, if you are lucky your content will go through a resolution constrictor and you'll be able to see a crappy fuzzy low-quality version of the content you paid for. The only way to fix this would be to buy a new 'secure' monitor.
The purpose of this constrictor is to down-sample high-resolution content to below a certain number of pixels. The newly down-sampled content is then blown back up to match the resolution of your monitor. This is much like when you shrink a JPEG and then zoom into it. Much of the clarity is lost. The result is a picture far fuzzier than it need be.More details at Slashdot
Oh and it's not only Microsoft, the article says the next-generation of digital content will, by and large, be protected to the display. Toshiba recently released specifications for its HD-DVD and it clearly states HDMI/HDCP is a display requirement for playing back high-def content. It is expected that Blu-ray will feature similar restrictions and who knows which other companies may follow.
Unfortunately almost every computer display sold today lacks these features! For televisions this news is a bit brighter as, according to Engadget, most TVs fortunately support this requirement.
What a bunch of utter crap. PC users don't want to be forced to replace their monitor with a new (and probably more expensive) DRM-compatible monitor just to view some movies. Content makers have the right to protect their work - but they should never ever limit the user!