Home Theater is a very broadly defined term. My view of Home Theater is a movie watching setup containing minimally a 32" television, a DVD player, a surround sound decoder (typically Dolby Digital or DTS, but Dolby Pro-Logic is still good), and a stereo system containing at least two front, two rear (surround) and a center channel speaker.
When I say "minimally", I am not kidding. True afficionados may have up to 60" rear projection or 6' front projection HDTV monitors with line doublers, subwoofers and other very high end stereo equipment. All of this of course can add up to some heavy investments, but the nice thing is that it is quite easy to upgrade one component at a time.
...under construction...