If you haven't seen or played any of the previous renditions of Dragon's Lair, then you should know that all of the video in this game is hand-drawn cartoons rendered in FMVs. While this means that there will be a few stutters as you select your options, for the most part, the transition between one clip and the next is pretty smooth.
Audio-wise, Dragon's Lair seems to have just as high a quality as it ever has, but then there is also the full surround-sound support that really helps to immerse you into the game. The music and sound effects have always been a high point in getting this game's mood across, and this version doesn't fall short.