Your DVD authoring software converts your rather large AVI into a more compressed MPEG2 format. This MPEG2 codec is the video codec used on DVDs. In order to ensure compatability with standalone DVDs, DVD specifications were introduced which include, amongst others, then minimum bitrate and framesize of your video.
The 4.7G limit is the physical data limit imposed by the DVD writable media, and the 2 hour limit representative of the size of the video at the minimum specs. The better quality your video (i.e the better the bitrate) the less video you can fit on a DVD. Normally you can't fill up a DVD "to the brim" with data to ensure that it plays in a DVD player, so this 4.7GB limit is in reality a little less.
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