A quick tutorial on formats and rendering:
The material in your camcorder is DV (avi) and you transfer it to your hard drive - still in avi.
You now do all your editing - cuts, transitions, titles etc.
What you do next depends upon what you are going to do with the video.
1. Return it to the camcorder (in DV)
2. Place it onto a website (WMF / MPEG4 / Xvid / DivX)
3. Create a Video DVD (MPEG2)
A normal Video DVD that plays in your standalone DVD player is made up of VOB files. In fact those VOB files are MPEG2 files.
Every time you 'render' (in otherwise create) a video you lose some quality. Therefore it is better to render Once. Choose your required format and render accordingly.
Smart Render.
If the final format is the same as the format you are currently working with then smart render will only 'render' the parts that have changed, everything else will 'stream copy.'
This applies to whatever software program you are using because we are dealing here with video formats and not video editing programs.
For more in depth information please view this article:
From Camcorder to DVD