Examples of DRM on embedded systems
There's a pretty good description on wikipedia about how FairPlay works, the DRM that iTunes previously used.  It's a fairly straightforward combination of public key and symmetric key encryption.

The main addition for embedded systems is the use of code protection schemes built into microcontrollers.  Basically, you program a bit that prevents you from reading the code back out.  In order to change the code you have to erase it completely first.  That prevents someone from just substituting their own encryption keys into the code.  Also, if you need unique device keys, those usually have to be programmed individually into EEPROM.