CBR is Constant Bit Rate, VBR is Variable Bit Rate. In a CBR MPEG stream the encoder uses the same amount of bits for every second of video. So if you set it to CBR with a bit rate of 5Mb/s all of the video will be encoded using 5 megabits per second. For some sections this will be enough, other sections could have been better with more bits per second (because they are more difficult to compress - e.g. lots of motion), while others could have used less bits and still look good (easy to compress - e.g. a shot from a tripod with almost no movement in the subject matter).
With a VBR encoding at 5Mb/s, the 5Mb/s would be the average bit rate. You would also set a maximum (and a minimum) bit rate. For the hard to encode sections the encoder will use more than 5Mb/s, for the easy material it will use less. But as the average is 5Mb/s, the resulting file will be the same size as the CBR one - i.e. it will take up the same amount of space on the DVD.
The advantage of VBR is that it uses the available space more efficiently. As it can use more bits per second for the difficult stuff there will be less artifacts in the MPEG-2 video.
Set top player compatibility should be the same for CBR and VBR. If you want to maximize compatibility for writable DVDs it may help to keep the total audio plus video bit rate at or below a maximum of 7Mb/s.
As many set top players have at least some problems reading DVD±R discs they will encounter read errors from time to time. If the read error exceeds the error correction the player will have to reread the information. While the player is reading again, the video will keep playing from the decoder's buffer. But as the size of this buffer is limited, it will be empty at some point. The higher the bit rate, the sooner the buffer will run dry. When that happens playback will stutter, stall or fail completely.
By using a moderate bit rate, you are giving the player more of a chance to recover from read errors. 7Mb/s isn't a magical figure, it is just a general recommendation - weighing image quality against compatibility.
If you know that the player used has no problems with writable DVDs you can ignore this advice. The same is true if your end product is going to be a pressed/replicated DVD.