This is because the technology to read Blu-ray discs is simply not included within the Xbox 360's specs.
HD-DVD
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.
Blu-ray
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.
