Unfortunately you won’t be able to play DVDs from your Mac’s optical drive on the Apple TV. However, if you backup the files using something like RipIt you can connect to your Mac and play the files using the Media menu on the Apple TV.
Desktop mirroring is slated to be included in the upcoming OS X 10.8 Mountain Lion release. Whether this will support playing DVDs I don’t know, but it may be a solution if you don’t want to backup the DVDs to the hard drive.