|First, the stock cable photo isn't quite right. The actual cable has one end that plugs into the XBox 360, that is a unique shape. You can't buy just any cable and have it work.|
The other end of the cable splits into 6 parts. There are 3 "regular" TV connectors that work with any TV - the normal yellow, white, red connectors you've seen on every other gaming system in the world. The other 3 are "component video" connectors, used with high definition TVs only. This is in essence a red / green / blue feed, so that each color comes in on its own separate channel.
This means that by having this one cable set, your XBox 360 can either play with an old style TV or with a High Definition TV, you just change which cables you plug in.
Note that there are two things you have to do in order to switch back and forth between the two feeds. First, there is an actual switch on the cable itself, to indicate which of the two signals should be used.
Second, you have to go into the XBox console, and change the setting there to indicate you are using a high definition TV. This lets you choose the quality of the feed, to match your TV's capabilities.
I of course highly recommend that everybody get a high definition TV, to see the high quality of gameplay available! If you're playing with an XBox 360 on a regular definition TV, you're missing out on a lot of the great graphics the system can create. However, if you're still saving up for a HDTV, at least you can enjoy your XBox 360, and know that it'll be super easy to connect your XBox 360 to your HDTV when you do bring it home.
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Explanation of High Def vs Normal TV