Why does DVDs stores more data than CDs?

DVDs has two layers where data can be stored, whereas CDs have only one layer.

The capacity difference is due to the laser used in the devices to read/write data on the disc.

The "beam size" of a DVD laser is much smaller than that of the CD. For blue-rays dics, the beam gets even smaller.

There's lots of info on the net with technical details of this. For more, try starting at:
Optical disc - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Optical_media)

Was going to say try the wiki, but the gist is a number of things, different materials of the disk, better encoding onto the disk, better laser read/write technology. Also as far as blue rays go if I'm not mistaken they also use the same technology that our hard drives do for read/write(its a mathematical formula that allows for much denser information storage) the guys that came up with it got the nobel for it.