In order to save costs and present a stable image on interlaced displays, most games developed before the year 2000 - and hence all the consoles and arcade games that played them - are rendered in a resolution around 320 pixels wide by 240 lines high, commonly referred as 240p. This video mode is actually a hack on top of the NTSC standard, but it works on all analogue displays.
The FCC forbade TV stations from broadcasting in this format, and it is not supported by NTSC or PAL broadcast equipment.
The trick used to achieve a progressive signal is to paint only even - or odd - lines instead of alternating between them. This is what causes the scanlines on a CRTs display; they are actually part of the image.
The 240p video mode is not considered by modern displays, since it is not part of the standard. Displays interpret it as 480i video, generating video artifacts and delay in the process.
In order to display a 240p signal in a progressive display without the delay to process 480i signals and without the artifacts introduced by incorrect processing, a video processor can be used. One such example is the XRGB, although there are many more options .
There is also a 240p test suite to evaluate how processors and TVs handle 240p video signals.
Support in modern consoles
More recent game systems tend to use only properly interlaced NTSC or PAL in addition to higher resolution modes, except when running games designed for older, compatible systems in their native resolutions. The PlayStation 2 generates 240p/288p if a PlayStation game calls for this mode, as do many Virtual Console emulated games on Wii. Nintendo's official software development kit documentation refers to 240p as 'non-interlaced mode' or 'double-strike'.
Shortly after the launch of the Wii Virtual Console service many users with component video cables experienced problems displaying some Virtual Console games due to certain TV models/manufacturers not supporting 240p over a component video connection. Nintendo's solution was to implement 'Wii Component Cable Interlace Mode' which forces the emulator to output 480i instead of 240p, however many games released prior have still not been updated.
The PS3 does accept the official Playstation RGB cable, but outputs 480i through it, instead if 240p when needed.
The Wii U does not output 240p though component.