All compressions are necessarily "lossy".
The less loss, the higher the quality but the bigger the file - exponentially!

They are therefore not the full DVD quality.

Quality is also determined by the compression algorithm used in the software to compress the original movie.

It's like anything else: You get what you pay for, if you don't pay, you just have to wear what's offered.

China and Japan lead the world in piracy, that's the reason for the subtitles.

In regards to surround-sound - see paragraph 4.