DVDs use DRM? Then, how do they work on an offline DVD player?
Yes, they use DRM. It's described here .. though the rest of your post suggests you already knew the basics.
And yes, you can play, transcode, backup, etc the data. You're right about that. But unfortunately, you're also right about this:
They fall under the DMCA, that's it.
And that's what causes many of the activities you describe, to be illegal unless you get authorization from the copyright holder.
I point this out not because I'm some kind of Law Zealot, but because many people have inhibitions about violating the law, and while it's extremely unlikely you'll get caught, it nevertheless does come with some slight risk.
Offering DVDs as an example of "they can't take it away," like I said, is technically correct, but DVDs are nevertheless a poor example, since so many routine tasks involving them, are illegal. Illegality tends to be a barrier to mainstream acceptance, and hampers utility in other ways.
Matroska files would be a better, more consumer-friendly example of "they can't take it away", since working with them doesn't come with as many legal difficulties (since there's no DRM, so DMCA doesn't apply).