Displaying content from a DVD on a panel with square pixels (LCD, plasma, etc.) required stretching or omitting some pixels. For widescreen content you'd need to stretch that 720x480 to 848x480, and for 4:3 content you'd need to stretch it to 720x540, or shrink it to 640x480, depending on the resolution of the panel.

CRTs of course had no fixed horizontal resolution.

Edit: I just realized I forgot about PAL DVDs which were 720x576. But the same principle applies.

When I played an anamorphic PAL DVD on a 4:3 CRT, the picture would look vertically stretched until I pressed the 'aspect ratio' button on the TV.

This would correct the display, but how did it do it? Was it by drawing the same number of scanlines, but reducing the vertical distance between each line?