Different technologies: LCD and DLP
There are two main types of projectors available in the modern market; LCD (Liquid Crystal Display) and DLP (Digital Light Processing). Original projectors were based on CRT (Cathode Ray Tube) technology and weighed upwards of 15 kilograms, but they have since been made obsolete by newer technology and are rare nowadays.
LCD, introduced to the market before DLP, functions in a similar way to many rear projection televisions. A small, coloured LCD panel is placed in front of the projector's bulb and the image to be displayed is imposed on the LCD from a notebook, computer or other media device (DVD player, VCR etc). The bulb shines light through the LCD projecting the image into the lens and then out onto the screen. LCD projectors typically operate with three LCD panels, one for each primary colour (red, blue and green). Each panel displays only the parts of the image in its particular colour spectrum and the three images are melded into one via a prism just before the light hits the lens.
DLP works in a different way. Rather than projecting the light through panels, it's thrown onto the projector chip (a Digital Micromirror Device) comprised of a million tiny mirrors on tiny little hinges. Each mirror represents a different pixel on the screen, and they rotate to direct the light into or away from the lens. In a single chip DLP array -- the most common -- white light from the bulb passing through a colour wheel hits the DMD (Digital Micromirror Device) chip and is reflected out through the lens onto the screen.
The colour wheel rotates, changing the colour of the light (red-green-blue) that reaches the DMD. The DMD regulates the amount of each colour in the image at that point in time. Unlike LCD, the image is not combined before it hits the lens. Instead, it relies on the speed of the colour wheel and how quickly each colour appears on screen. If it is fast enough, it can fool the human eye into seeing only on image, which looks as though it is combined. This all continues many times per second -- the higher the speed the better the image -- resulting in a moving projected picture.
The colour wheel may also include a white light filter to boost brightness. In a three chip DLP array the colour wheel is superfluous, with each colour reflected off its own DMD. While for many people DLP projectors are excellent, some are able to see the flashes of red, green and blue across the image, known as the Rainbow Effect. This effect is caused by the alternating colours not moving fast enough to fool the eye into believing it is one image. For those unlucky viewers, watching a DLP projected image is very distracting and headache inducing. If you are looking at getting a DLP projector you should watch it running and dart your eyes across the image to see if you experience this phenomenon before making your purchase. Some single-chip DLP projectors use a six-segment colour wheel to reduce the Rainbow Effect.
LCoS (Liquid Crystal on Silicon) is a third technology, but as yet it has not achieved the economies of scale to make it a viable alternative. In LCoS an image is reflected off a mirror through the lens and onto the screen. LCoS projectors typically operate at a higher resolution and are more expensive.