I mean, the answer is "because they were compressed to fit on a HD DVD", but you can still see this in the PC versions of games that came out in the seventh generation.
There's colour banding, crushed blacks and who knows what else going on with these things. PS2 cutscenes did not look as bad and they were in DVD quality.
I have to assume it wasn't this bad on the PS3. I mean, that's what the Blu Rays were for, right?
The hacking community has kept it alive to some extent, but I have never tried PS3 Linux. I have worked with the IBM Cell CPU used in PS3 before while making a traffic light control system. I chose it at that time because the need for a large amount of parallel vector math. It is shockingly good at this for the time it was made, but only if the application does not benefit from cache as the 7 SPUs do not have more than simple L1 cache. The tasks must also be completely parallel and code must be written specifically to run on the SPU.
When I made my comment I wasn't aware that there actually is a surviving PS3 Linux community! I wonder if my mom still has the fat PS3 I left at her house for the kids to use years ago...