The Blu-ray version of the telephone pole close-up shows much more detail—including noise or grain. The trouble with noise is that it's random so it doesn't compress well. This means the stronger iTunes compression needs to get rid of both detail and noise—which are the same thing to a compression algorithm—to hit its compression target. The BRD, on the other hand, can happily reproduce the noise as present in the source, burning up untold megabits and leaving details untouched.

Now, this is exactly what I was talking about. That looks ugly as f*ck in the iTunes version. Over-all the film is probably very watchable (which is admittedly quite an achievement at less than 1/10 the size of a BD) but it just doesn't do justice to the original cinematography. Then of course, if you're watching this on an iPad or a small laptop, you probably won't even notice the difference but if you blow it up to like 50 inches or more, that's when thing will get ugly. And like I said, even a 50GB Blu-Ray of a film the original cinematography of which was very grainy, will have this problem (Aliens and Godfather are perfect examples of this).