If you have a short video (under an hour), you can just encode it at a high constant bitrate (8,000,000 bps). There is really no advantage to VBR for short videos, and the downside is that it needlessly takes more time.

The reason to use VBR is when you have a longer video, and you can't encode the entire video at a high bitrate without running out of space. As kentwolf said, in those situations, VBR figures out where it can get by with a lower bitrate (in scenes with relatively little motion), and encodes at lower bitrate so that the fast moving scenes can still be encoded at a faster rate. Of course, all this assumes you have a video that has fast motion scenes, and slow motion scenes. If your entire video has the same amount of motion (like a wedding ceremony with the camera locked down at the back of the church), VBR isn't going to do much for you.

Two-pass VBR takes a complete pass through the video so it knows precisely how much motion happens at each moment. It then does a second pass where it actually does the encoding. The two-pass approach ensures that the changes between low and high bitrate encoding get done optimally.

Thanks John, so would you recommend the 2 pass process?

For most video, probably not. It is a big price to pay (2x the render time), and I don't think you will notice a difference. However, here is the situation in which I would consider using it:

1. You have to squeeze a lot of video (many minutes) onto one DVD. If you have an hour or less of video, I wouldn't even bother with variable bit rate. Encode instead at 8 megabits per second (8,000,000) using constant bitrate (CBR). This gives you the fastest possible encode, and best possible quality for the entire DVD. There is really no downside to this at all (although there are some apocryphal stories about DVD players not being able to play DVD-R or DVD+R encoded at higher data rates, this despite the fact that the DVD spec requires that a player be able to handle a total bitrate, of audio pluse video, of 9.8 mbs).

However, if you have to get 90 minutes of video or two hours of video on a single 4.3 Gbyte disc, you are going to have to go to a much lower encoding rate. If you have started with pristine DV, you will notice degradation, especially as you start going below 6.5 mbs (nothing magic about that number -- that's just my guess). Certainly by the time you get to 5 mbs, you will see the difference.

2. However, even if you need to put a lot of video on the disc, VBR, much less 2-pass VBR, won't buy you much unless there is a significan variation in motion from one scene to the next. If your entire video consists of a talking head, you won't get a thing from VBR because there is no variation in motion. The whole idea of VBR is to encode at higher bitrates (better quality) where there is fast motion (because MPEG encoding looks worse when there is motion), and then slow down the bitrate for slower motion. Since there is an exact, fixed number of bits on the DVD, you have to use those bits wisely.

3. If you are superstitious, then use VBR. I mean this in the kindest way possible, but some people don't approach this scientifically, and they just want "the best" no matter how long it takes, even if arguments like mine show that it won't make any difference. Certainly, if you have the time, I am not aware of any situation where using variable bitrate will look worse than using constant bitrate (assuming the average value for VBR equals the CBR bitrate), and I don't know of any situation where 2-pass will look worse than 1-pass. Thus, if you have time to burn, turn on the 2-pass VBR and let it go crank.