This is because the technology to read Blu-ray discs is simply not included within the Xbox 360's specs.
Microsoft did have its own crack at introducing high density media discs to its Xbox 360 consoles with its ill-fated HD-DVD playing attachment. Ultimately, Blu-ray won the format war, and that device has since been discontinued.
If you want to watch Blu-ray discs at home, you are going to have to shell out for a specified Blu-ray player, or a Playstation 3 (shock horror!). Failing that - and if you are a particularly hardcore Xbox 360 fan boy - you could always wait until the next iteration of the Xbox console comes out. It will no doubt come equipped with a blu-ray player (Microsoft would be pretty stupid not to include it), and rumors spreading throughout the web are certainly pointing towards this fact being true.