How do game consoles play games without installation?

It fascinates me that a game console like the Xbox 360 is able to read and display information from a game DVD instantly without installation, while a PC game generally requires you to install the data from the game DVD to the hard drive, and then the data is read from the hard drive when the game is played. In fact, you can install a "crack" which overrides the original game executable, completely eliminating the need for even having the DVD in the drive at all when playing. I've heard that it has to do with file size, but I don't see the logic behind that. I say this because I believe Halo Reach for Xbox 360 takes up almost 7GB on the DVD, while I can't play Age of Empires II off a CD that probably has less than a GB of data. So, how are consoles able to do this while PC's cannot play games directly from the CD? I normally wouldn't ask this here, but I can't find the answer anywhere else.