This has been explained MANY times, including in the past couple of days. But essentially, you are not in fact saving a video when you save the VSP file. That is merely a project file, and a relatively small one at that, which tells the program what has gone into a particular project: what video clips were used and where they are located; what audio files and their location; titles added; and any other information about any other editing which has been done. It is NOT a video format file.
And yes, you can 'save' a file as an AVI (or DV/AVI), though it is not just a simple matter of clicking on the Save button... If, say, you have captured a file from your camera in DV format; then it is already in DV/AVI format. You then do your editing, and THEN you go to Share > Create Video File, and choose DV format. A new file is then created in DV/AVI format which contains your original video clips plus all the editing you have done.
But you can't save it every few minutes or so (unless you go through this Share process). But in effect, there is no need: as I say, normally, your captured clip(s) are already in DV/AVI format, and by saving the VSP file, you are in effect telling the computer to remember what has been done to that DV/AVI clip(s) without any need to further save those clips until you get to the Share stage.
That .VSP file is of crucial importance because it remembers where all the little extras are located: still photos you insert, voice-over clips, background music. These things may be all over several harddrives, but that trusty little .VSP file keeps track of them all, as well as the original .AVI file you're editing.
But as Ken Berry says, clicking on "Save" in VS is not like clicking on Save in MS Word. No new file is created. You have to pass through the "Share > Create Video File" step to truly save your video file with all the changes you've decided on. And even then, the original video file stays unchanged. A second video file appears.