DVR-MS is a proprietary file format used by Windows Media Center Edition. "DVR" is said to stand for "Digital Video Recorder", and the "MS" stands for Microsoft.
DVR-MS uses MPEG2 compression, with extra information added specific to Windows Media Center.
DVR-MS is not compatible with other applications. Generally speaking, you can't import a dvr-ms file directly into a video editor or media player. However there are ways around this.
Converting DVR-MS to Other Formats
According to various reports, some software applications can be fooled into treating dvr-ms files as standard mpeg files simply by changing the extension to .mpg. However this is the exception rather than the rule. In most cases you need to use a utility to convert the file.
We recommend that you search for a good conversion utility (we don't like to recommend a particular one as they change so often). Read current reviews and do your homework.
The good news is that the conversion process is quite straightforward and the resulting file should be virtually the same quality as the original file.