You buy points. Minimum from Disney is 150. You get 150 points to spend every year. These spend like cash. At the top of these pages you will see a link to DVC
point charts. This tells what each resort costs in points. There are seasons which require fewer points, just like there are seasons that require less cash. There are studios which require the least number of points, one bedroom, which have a full kitchen with washer/dryer, and two bedroom which are the same as 1BR with a studio lock off or a separate second BR. There are also a few grand villas (3BR-sleeps 12). Again, the accomodations determine the number of points.
You pay an annual fee to maintain these points (or the resorts). The annual fee is a per point fee. My BWV point fee this year was $4.84 per point. That fee is adjusted (usually up) every year. That's where your $800 per year is coming from.
You don't need to spend your points every year. You can bank them. For example, I didn't use my 2004 points; I banked them and used them with my 2005 points for a week long in a two bedroom at BW. You can also borrow points. I am using my 2006 points and have borrowed some 2007 points to take two short trips this summer. Points can expire if the are not banked, or if they are banked but not used within the time allotted.
The more you use DVC, the more you reap the benefits. I would never suggest that it pays for itself. You get a discount on annual passes. You get discounts on golf, and you get 10% off some restaurants. The benefits and discounts vary from time to time.
You become savvy at using points wisely, so the idea that you get a week at DVC isn't accurate. Many people get multiple trips. During the off seasons and avoiding weekends you can spend 5 days for 60 points.
We went every 2-3 years. As the kids got into their teens, we found that one hotel room wasn't enough. We were staying at a moderate resort, getting two rooms and spending almost 250 per night. No washer dryer, no kitchen, nothing. We stayed at BW in a 1BR. Two years later we went back to the moderate, and found that we loved the convenience of the DVC so we took the plunge.
Everyone has a story about how they came to the decision to buy in. I don't think it's for everyone. We just love Disney and didn't mind committing to it for 43 years. My kids are 22 and 20 and I look foward to having them use the points with us or alone for many years to come.
We are heading down for father's day. The 15-19 at SSR in a studio. In July we are taking the inlaws for 5 days, a BW view 2BR. I will be spending 1 night at OKW in August when I take my daughter home. All of these are paid for by points. I used some 2007 points since my wife and I are looking at Hawaii for our 25th anniversay.
There are some websites that explain it better than I can. This is just a personal view from my perspective.
we have been members since 1998, and wish that the people we talked to on two previous trips had been able to explain things better, we might have gotten in on the ground floor, our only regret. 
