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On small direct-view analog TVs, for example, you'll be hard-pressed to see a difference between an S-Video and a component-video connection from a DVD player. On higher-resolution, HDTV-capable direct-view and rear-projection TVs, though, the distinction becomes much more obvious.
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Component video improves the picture quality even more by not only separating the color from the black-and-white portions of the picture but by further splitting the color information into two color-difference signals. When the picture signal is split up in this way, you get an unfiltered, uninterrupted image, with better resolution and greatly improved color saturation. And this is why component video is the predominant method of hookup from HDTV set-top decoders to HDTVs.