The wavelength of light is THE limiting factor for optical disk capacity. On the subatomic scale, the location of objects is blurry because of quantum mechanics. The uncertainty of the location of a wavelength of light is related to it's wavelength.
In optical disks, the separation distance of pits and lands is only a little bigger than the wavelegth of light used to read from the disk. If the separation distance were made shorter so that it were equal to the wavelength of light, then the photons would mistakenly read adjacent bits rather than the target bit a high percentage of the time.
It's pretty easy to calculate the size of a bit on a optical disk compared to the wavelength of light used.
Area of dvd: (0.18meters/2)^2*pi - (0.043meters/2)^2*pi = 0.024 meters squared
Data on DVD = 4.7*1 billion bytes * 8bits/byte = 37.6 billion bits (this may be inaccurate due to error correcting codes and stuff)
0.024 m^2/37.6 billion = 640,000 square nanometers
Wavelength of light used by DVDs = 650nm.
650^2 = 422500 square nanometers.
So you can see that the physical size of a bit on a DVD is not much bigger than the "size" of a red photon! It's actually pretty incredible technology when you think about it. (my estimate of the size of a bit on a DVD is a little on the big size because I assumed DVDs use a simple data encoding scheme but I know it must actually use some sort MFM or RLL or some other sort of thing like that.)