For a more detailed explanation of DVNR (also known as DNR) and how it compromises the integrity of the cartoon image, here's a link to a piece I wrote back in 1999 while I was working at ANIMATION WORLD MAGAZINE. You'd think six years later, the studios would have learned something, but they're as negligent as ever. Recent releases of Rocky & Bullwinkle, Woody Woodpecker, Tom & Jerry and Looney Tunes have all been marred by DVNR technology. The irony is that many times when studios release a "digitally restored/remastered" version of a cartoon, it looks worse than in previous "unrestored" editions.
Here's a terrific new piece at Lyris-Lite.net that specifically illustrates the DVNR artifacting in WB, Disney and MGM cartoon releases. Though the article shows examples of a DVNR'd Disney cartoon, they are incidentally the studio that has been best at preventing DVNR and deserve praise for their generally careful restoration of classic cartoons.
UPDATE: Thanks to Boing Boing for their post about DVNR.