well for simplicity you can treat the CD itself as a diffraction grating, since the information is encoded as dips in the surface, it forms a repetitive grating like pattern. When you shine the laser on it, the reflections will interfere in the same manner as the diffraction grating. Now on the wall you will get a projection of little dots, and from that you can work out the distance between the pits on the surface. Assuming one pit to be a bit of information, you can then work out the number of bits that can be stored on the surface area of the CD.