"Hz" (Hertz) in this case is a measure of how often the display refreshes its picture, analogous to frames per second.
Most HDTVs in North America are 60Hz--largely due to the fact that our AC power cycles at 60Hz, and because it carries over old-fashioned analog TV's characteristics of refreshing at 60Hz (60 interlaced fields per second for a total of 30 frames).
Film, on the other hand, is 24 frames per second, which, obviously, doesn't go into 60 evenly. DVD and Blu-ray solve this issue in slightly different ways. On a DVD, the signal is encoded at 60Hz; they figured out a way to distribute the 24 frames of film over the 60 interlaced fields so that, while the distribution is uneven (some frames get 3 fields, some get 2), the motion is as smooth as it can get, and most people have become used to it (what progresssive scan DVD players do is pull the interlaced fields together to reconstruct the original frames and output them progressively, so there'd be an improvement in the picture on TVs that can display progressive frames).
On a Blu-ray, however, feature films are usually encoded at 24fps, leaving it up to the player to figure out what to do with the signal. If it detects a 60Hz TV on the other end of the connection, it will pull the 24fps signal apart to fit--there's some judder, but like with DVD, it's something that you don't really notice unless you've seen it a better way, and it's watchable.
Newer, higher-end TVs nowadays feature 120Hz (or even 240Hz) refresh rates, meaning that 24 frames per second *can* be distributed evenly. This yields a more cinematic look with no judder, as the TV is displaying each frame completely at 24 frames per second. Many 120Hz screens also feature some sort of motion-smoothing technology ("MotionFlow" on Sonys, "Auto Motion Plus" on Samsungs--different manufacturers call it different things), which uses interpolation to calculate frames in between existing frames to make the motion smoother--this usually results in a strange "video"-like look to the footage, and doesn't work perfectly, causing digital artifacts; I usually recommend that motion-smoothing be turned off.
Now your TV is a bit odd--all the things I've read up on it indicates that it's not a 120Hz TV, and it doesn't seem like it really slows down to 24Hz. I think what it's doing is that it can accept 24Hz video information, and does the job of pulling the signal apart to 60Hz (rather than your Blu-ray player doing it). What you might try is manually setting your PS3 to 1080p/60 rather than letting it go automatically to 1080p/24, making the PS3 do the job of converting to 60Hz; see if that makes it any better. On your PS3 (assuming your firmware is up-to-date), it should be under "Video Settings", a setting called "BD 1080p 24Hz Output (HDMI)"; try setting it to "off" instead of "automatic" or "on." I'm not positive it'll yield better results, but perhaps the PS3's hardware will do a better job of converting than your TV.
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