I digital copy is a legal downloadable version of the movie to put on your computer, iPod, etc. It is an attempt to appeal to consumers who want to be able to watch a movie in their home theater or take it on the go.
I can't say that I know how big it is, but given the maximum capacity of a DVD it can't be too huge. Also, I think there are ways to compress the file to fit on mobile players such as an iPod. So that would make it smaller anyways.
I was confused too but went ahead and ordered it. No download link was forthcoming so I called Amazon help. I assumed that the digital copy would be a downloaded but apparently you receive it with the actual dvd set. Works for me but not for my daughter who thought she would be able to watch it TONIGHT. Oh well.