The Dreamcast is capable of running games either by directly addressing the processor, or by sitting on top of a customized Windows CE operating system. The former will yield more efficient results, but will be more difficult to program. The latter option, however, means that high-end computer games can be ported to the Dreamcast very easily. Apparently the libraries provided by Microsoft are extremely easy to use and the whole Windows CE system will provide the best user interface yet seen on a console. It's no surprise that Sega has gone with the CD-ROM format.
Carts are history and DVD is still too expensive.
The 12x CD-ROM built into the Dreamcast is very fast so load times will be reduced. Currently unconfirmed games rumored to be in development. It's the all-new supasexy IGN Dreamcast site.