All files released under the GPLv3 license [1] unless otherwise specified.  Ping me if you want/need this changed.

May contain some 3rd party libraries/executables under their own (separate, open source) licenses.

Is this legal?  

Unclear.  In general ripping personal DVD's is fine.
It is controversial to use open source software to play/rip DVD's.
There are a few conflicting views.  
Sensible-cinema doesn't actually do any decryption or decoding, nor has any knowledge of it,
but calls out to another separate program to rip.  It doesn't even have knowledge
as to whether it is ripping something encrypted or not.  We don't distribute sensible-cinema with
that program, either.
You can ask the authors of that program if it is legal.  Apparently
libdvdcss that it uses has never been challenged in court, and uses a slightly different algorithm
than those that have.
Note also that fair use does allow one to "record" things (especially things that they own)
for personal use/backup.
Using sensible-cinema is probably not any more unethical than ripping your DVD collection to your hard
drive so you can keep your DVD's all in one place.
Also note that if you watch an edited DVD, your are using a DVD player that conforms
with DMCA specifications, so that might have some influence.

In general, you are responsible for your actions and use of this program.
It is possible that the authors of sensible-cinema are not cupable of anything
regarding its use themselves, since they re-distribute no edited media, 
nor distribute cracking codes.  In general, check your country's rules first.

In terms of copyright, it could indeed be legal, at least in the United States, when viewed
using the "playlist" option (v 0.10'ish).
In general, if I have the original DVD sitting next to my TV, I don't feel bad about watching
its edited copy at the same time, but please consult a laywer first if you have any concerns.

Do not redistribute copied commercial DVD's.  We have learned from clean flicks that
redistributing edited commercial DVD's is illegal in the US.  We hope that sensible-cinema
is more legal, since you can get the DVD's from wherever you want, and it doesn't change their
structure at all.  Please don't redistribute.

DO NOT MAKE ILLEGAL COPIES.

Note that this software might well be legal in the EU, 
as it is only software and therefore thus possibly not subject to patents (see "What about patent licenses?" in [2]).
If it's not legal in your country, don't use it!

A more ancient history of various related thoughts was described here:
http://betterlogic.com/roger/?p=2618

Also note that several ideas have been released in the code that are disabled in the final release.  Please see the blog
for release notes http://betterlogic.com/roger, as well as http://ruby-forum.com (ruby talk ML there), and rubygems.org
which lists the various releases, and github.com/rdp/sensible-cinema which lists commits and changes and releases.

[1] http://www.gnu.org/licenses/gpl.html, also gplv3 file.
[2] http://www.videolan.org/support/faq.html