I-pictures are compressed independently (similar to JPEG images). This means they're ideal when the image changes a lot, but take up a lot of bits. So if you use too many I-pictures, you will need an overall higher bitrate to keep the quality up.
P-pictures are based on previous I and P-pictures. This means they can re-use existing parts of the image and therefore take up much less bits than I-pictures. Using P-pictures lets you keep an overall lower bitrate, and use the excess to improve the I-pictures. However, P-pictures may decrease the image quality if there are too many changes from the previous frame. The option to detect scene changes in an encoder will automatically insert an I-picture if it detects a big change between two frames.
B-pictures are based on past and future I and P-pictures. They provide the best compression but, as with P-pictures, have problems when the image changes too much. Also, bear in mind that B-pictures cannot be based on other B-pictures, so don't use too many in a row or the image quality may suffer, especially if there are any cuts or sudden changes. If you're using a high average bitrate (above 6500), you can use I and P-pictures only.
Max frames in GOP (made up of I,P & B): 15 (for PAL) or 18 (for NTSC). [Normal setting is 12/PAL , 15/NTSC]
These are the standard DVD limits. If a GOP has more frames than the standard allows, authoring programs will usually reject the file.
Basically, I frames are basically keyframes. P frames are predicted frames as far as what the encoder thinks will be the changes and B frames are just what is different from on to the next.
That is not technically accurate, but it is a way to remember them.