Back in the day, ST:TNG was produced with all the raw elements (live action, model shots, visual effects etc) on film. However, these elements were then transferred to video tape before the elements were assembled into the final episode. The previous VHS and DVD releases came from this video master tape. Unfortunately, this wasn't going to cut it for Blu-Ray and HD, so Paramount had to go back to the original film rolls - stored for a quarter of a century in a salt mine in Pennsylvania - and basically re-assemble every episode from the ground up.
It's an impressive amount of work that, based on the video above, seems to have paid off.
A precise release date for the Season 1 Blu-Ray set has not been set, although I'd put money on it being September 2012 (the 25th anniversary of ST:TNG's first episode airing).