Not to steal BK's thunder, but since I make part of my living tossing around Shayne's verbiage:
DNR=digital noise reduction. When elements are artificially sharpened for high definition, you often get an increase in grain and general "noise," i.e., ugly little particulate matter that makes the image look dirty. DNR is applied, often egregiously, to smooth out that look. You can tell if an image has overly aggressive DNR if there's no apparent grain and things like skin pores are non-existent.
AVC is one of three compression codecs used to compress video for Blu-rays. The others are VC-1 and MPEG-2. MPEG-2 is the codec utilized for Standard Definition DVDs. AVC seems to be taking the lead in most recent BDs.