Your avi files were more compressed than your DVD mpeg2 files. When transcoding to another format the video is first decompressed and also resized to match the destination format. Then it is compressed again to a bitrate that you set in the encoder (unless it’s done automatically).
DVD bitrates are typically from 1 mbit/s up to 10 mbit/s.
Avi bitrates depends on the codec that is used and what bitrate it’s set to. DV Avi from digital camcorders need 13 GB for one hour of video and divx may only need 400 MB for one hour. But when transferred to DVD both will be the same size if compressed with same bitrate. The maximum bitrate on a DVD will hold one hour on a DVD-R (with almost transparent quality) but it can be compressed at lower bitrates and resolutions and you may fit up to 8 hours at the lowest quality settings (with quality worse than VCD).
Alternatively you may want to find a standalone player that can play divx. Then you can burn your avi as a file and you will not degrade the quality or increase the filesize.