Encoding video files to DVD is a rather complex subject. There are many steps to take and many factors to consider. But it's possible, and isn't too hard to do once you know what you're doing.
First of all, a DVD has to be in either mpeg1 or mpeg2 format, so you have to convert any .avi files you have. You might even have to convert mpegs as well, if their parameters fall outside of the DVD specs.
How much video you can fit on a disk depends on the dimensions and bitrate it's encoded in. You can get up to about 7 hours of video on a disk, but the quality at that capacity can be all but unwatchable. At decent VHS quality, I'd say 4-5 hours is average. In my experience, a 700MB .avi can be converted to an mpg of about 800-900MB with almost no degradation in quality. Remember though, that the video will be a bit more diffuse on a large screen than in a small monitor window. And of course, it depends on how good the original source video is as well.
Once you have your video converted, you have to author it, that is, prepare the menu and file structure needed for the DVD. This can be a single simple menu with a few buttons, or a complex layout almost as good as professional disks. I believe most players will even handle no menu at all, but that's not very convenient when you have multiple videos on a single disk.
Unfortunately, Linux doesn't yet have that good of a selection of gui tools available for DVD authoring, but it has a great selection of command-line tools available. Transcode is probably the best for video encoding, and just about everyone uses dvdauthor for authoring.
The one gui program I'd recommend for you is qdvdauthor. It combines the functions of transcode and dvdauthor, so you can load an .avi file, transcode it, then author a menu for it all-in-one. It still isn't "easy" though. It's not particularly stable, and it can choke on certain files. You'll probably also still have to learn how to edit the dvdauthor .xml file and tweak the other command-line programs it uses before you can generate the final dvd, but at least it'll be able to handle a lot of the basic stuff for you.
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