General points

Video DVDs are made up of VOB files which are basically packaged MPEG-2 A/V streams.
You cannot just burn an AVI or a MOV onto a DVD and hope that it'll play on a DVD player; you need to convert the AVI or MOV to video DVD format first.

Making a DVD with Premiere Pro

Using the Export to DVD function

Enter a blank DVD into your DVD drive
Select your timeline
Go to File > Export > Export to DVD
Select the "Encoding" tab on the left
Select the Preset that you need (e.g. in the UK select PAL DV High quality 4Mb VBR two pass)
You can edit the exact settings if you desire (for example, if you need to set it to 16:9 aspect ratio)
Go through the remainder of the settings and ensure they are set correctly (if you're unsure then just leave them)
Hit "Record"!

Using Adobe Media Encoder

You need to make MPEG 2 for the DVD, so you should export it out of PPro with the Adobe Media Encoder. Select the MPEG2-DVD presets and start with the "PAL DV 4x3 High Quality 7Mb VBR 2 Pass SurCode for Dolby Digital 5.1" preset. You get three free encodes with the SurCode encoder, so before you render this, switch to MPEG or PCM audio or if you are doing surround, you probably need to purchase the 5.1 encoder. The encoder will make the .m2v and a corresponding .wav or .mpa depending on which you select. Note, the VBR will "render" the file one time then it does it again. The first time, it is just looking at the file to decide where to vary the bitrate (hence the name Variable Bit Rate). So this process takes longer. If you are not concerned with saving space, you can use the CBR preset which is above the VBR preset.

If you render an .avi with DV compression out of PPro and import it into your DVD software to encode to MPEG2, you are double compressing and it will degrade quality.

If you render uncompressed .avi or .mov and import into DVD software and encode to MPEG2, you have a huge intermediate file to deal with.

If you plan it out properly, encoding the MPEG 2 out of PPro is the most logical thing to do for most situations.

For example: you have a majority of video that is DV25 and put some uncompressed graphics over the top, either supers or CG stuff or whatever. When you render to DV, you get nasty compression chunks and artifacts around the edges of the text or in gradients etc.. You could retain the quality and render out of PPRO as uncompressed .avi or .mov, but that again is a huge file and the DV content does not benefit AND you still have to compress it to MPEG2. The graphics do look good, but the file is hard to work with. If you render to MPEG2 as I specify above you don't render to DV then MPEG2 (no concatenation from dual compression) and you have a decent sized file.

Note there is a bug with Hyperthreading and the Adobe Media Encoder, there is a patch from MainConcept to fix it.