Head on over to Gizmodo to read an excellent “contrast ratio” write-up:
What is contrast ratio? Simply put, it’s the difference between the darkest and brightest spot on a display. This is expressed as a ratio measuring luminosity. A good way to think of contrast is like the volume on a stereo. You might have a stereo that goes all the way to 11, but that doesn’t mean it sounds good.
Just keep in mind an individual spec like contrast ratio doesn’t live in a vacuum: When making a HDTV or projector purchase (or bragging to friends) factors such as color range, resolution, and even price should be taken into account.