Letterbox
Letterboxing is the practice of copying widescreen film to video formats while preserving the original aspect ratio. Since the video display is most often a more square aspect ratio than the original film, the resulting master must include masked-off areas above and below the picture area (these are often referred to as "black bars”). The term takes its name from the similarity of the resulting image to a horizontal opening in a postal letter box. The resulting video master utilizes only a portion of the display screen, the technique offers an alternative to the older pan and scan method of copying that cropped the image to suit the 4:3 (or 12:9) ratio of the television screen and preserves the original composition of the film as seen in the theater.
Sometimes, by accident or design, a standard-ratio image is presented in the central portion of a letterboxed picture, resulting in a black border all around. This is referred to as "matchboxing" and is generally disliked because it wastes a lot of screen space and reduces the resolution of the original image. This can for instance be seen on some of the DVD editions of the “Star Trek” movies whenever the widescreen documentaries, included as extras, use archival footage from the original TV series. The alternative would be to crop the original 4:3 TV images horizontally to fit the 16:9 ratio.
HDTV, a newer digital video system, uses video displays with a wider aspect ratio than standard television and, is becoming the broadcast standard in the United States. The wider screen will make it easier to make an accurate letterbox transfer. Some contemporary television programming is being produced in letterbox format. This is done both to give a "classier" look to the image (particularly in the case of advertising), and to facilitate the production of widescreen programming for later syndication in HDTV. 16:9 widescreen television is also becoming common on European digital television systems. Of course, on a true widescreen television set the "letterboxed" 16:9 picture is no longer letterboxed since it fills the entire screen. However, movies made in even wider aspect ratios are letterboxed to some extent even on 16:9 sets.
SOURCES:
http://en.wikipedia.org/wiki/Letterbox