Since the release of Mac OS X 10.7 (Lion), there is now a recovery partition built into your Mac, so you no longer need to boot from a DVD to carry out system repairs.

option_keyTo access the Recovery Utility in Mac OS X, you simply need to reboot your Mac and after you hear the chime, hold down the Option Key.

You will be presented with a list of the volumes that are available to start up from.  One of these will be called Recovery.  Click it and press the arrow button to startup from that volume.

Your Mac will now start up in Recovery Mode where you can carry out various tasks, including a complete re-installation of your Operating System if you wish.

Other options available from the Recovery utility include access to Disk Utility to run checks on your hard disk and also to repair disk permissions.  You also have access to Terminal if you wish to execute commands on the command line.

You will mainly want to enter Recovery mode if something has gone wrong with your Mac, like for example if it won't start up, or if you are experiencing strange behaviour while using the Mac (slow, spinning beach ball, missing file or folder icons etc.) which can be an indication of a hard disk problem.  You can also use the recovery utility to reset your user account or administrator password on your Mac.