Mini DisplayPort is the current digital standard on all current Macs to transfer video to an external display or TV. It has been introduced in 10/2008 with the release of the Unibody MacBook and MacBook Pros and has gradually been adopted on all other Macs.
MDP is capable of transmitting video, and since 2010, audio too. MDP is a miniaturised version of DisplayPort. It is also license free and can support resolutions of up to 2560 x 1600, which Mini DVI and Micro DVI are not able to do.
Since 2011, all Macs come with a Thunderbolt port, which is meant for fast data transfer and also as means to connect to an external display device to mirror or extend the Mac's screen.
To learn more about Thunderbolt (TB) and its compatibility with Mini DisplayPort (MDP): Introducing Thunderbolt
I specifically bought the 21.5" because I wanted a dual monitor setup and I already had a 22" HP monitor which works well with my iMac.
I have the MDP to DVI connector and it works quite well. The only problem is when coming out of sleep it takes a bit longer than I would like for the HP monitor to come back on and sometimes whatever windows were open on it get bumped back to the iMac screen. Just means I have to drag the window back over which is not too much of a drag... (Pun intended).