In terms of Pal resolutions, a 16:9 image is 1024x576 when unsquashed. This is then squeezed to 720x576 when encoded / rendered and flagged as 16:9 so that the image is streched horizontally for 16:9 TVs and squashed vertically for 4:3 TVs.
A DVD Image is never stretched vertically, but horizontally.
An Anamorphic lense distorts the horizontal image so that you can fit a rectangle into a square (roughly speaking), so that you can make full use of the frame. In the same way anamorphic video when put onto digi-beta or whatever is squashed horizontally so that the hight remains constant, with as much detail as possible, but the width is squeezed to fit the new frame.
Film and DVD Anamorphic do the same thing, hence the same name.
DVD-Boy