how Content Scramble System (CSS) works? As I understand, the Content Scramble System (CSS) uses proprietary 40-bit stream cipher algorithm to decrypt the DVD content 

My question is; where does this key come from? is it embedded within the Hardware DVD player or within the software player?

what's the principle in which this method prevent DVD copy?
1. Where does this key come from?
2. Is it embedded within the Hardware DVD or within the software player?


The soft|hard players have to authenticate to access the key from the disk. From Wikipedia


The details of CSS are only given to licensees for a fee. The
license, which is bound to a non-disclosure agreement, wouldn't
permit the development of open-source software for DVD-Video playback.
The player has to execute an authentication handshake first The authentication handshake is also used to retrieve the disc-key-block and the title-keys.

So, non-disclosure has the force.

3. what's the principle in which this method prevent DVD copy?

It has three types of protection, from wiki page;


Playback protection is based on encryption: the player requires a secret key to decrypt the feature.
Read protection is based on the drive: access to significant disc data is only granted if the player authenticates successfully.
Regional restriction is based on the disc and the drive: the drive can deny access if the disc doesn't belong to the drive's region.

All three protection methods have been broken.

And the keys are in the lead area of the DVD2;

It prevents byte-for-byte copies of an MPEG stream from being playable since such copies will not include the keys that are hidden on the lead-in area of the protected DVD disk