nashvilletitans:
Composite and component are 2 different types of video. Composite is the old single cable, usually with a yellow RCA plug on the end. It's frequently the only video out on VCR's, although some also have S-Video.
Simplistically speaking, component video separates the colour spectrum into 3 different “channels†and is far superior to composite, which contains all video information in one channel.
Worst to best quality is composite, S-Video, and component. High definition devices, such as satellite receivers, carry their HD signal over component and/or VGA. Progressive scan DVD players have component outputs as well.
This is a somewhat simplistic explanation. You can find lots of information by searching on this or some of the other forums, such as HDTV Hardware.