Reducing file size to save storage space also reduces quality of the recording so it is up to you to select a quality which is acceptable to you.
I suggest that you download a program such as "FormatFactory" which allows you to select different components of a file (file type, bits per sec, frames per sec, frame size, etc.) and try converting a sample DVD file to various alternatives until you find the one which suits you.
Just try the different file types, etc., on the computer to see the actual file size before making the DVD.
Hope this helps.