The Carthay Circle Theater hosted the premier of "Snow White and the Seven Dwarves." At the time, it was the height of movie theater coolness, but it has since been torn down.
Since Buena Vista Street is supposed to be the Hollywood of Walt Disney's early career, they decided to include the theater, but turned it into a restaurant. The inside has Snow White styled murals, and lots of memorabilia from the movie and the premier.
I'm sure someone else can shed more light on the details, but that's the gist of it!