Nearly all commercial DVD have CSS (Content Scramble System - for more info see
here) encryption - only some very old commerical DVD-Video do not. In order to play them the hardware or software player needs to decrypt the video data first (in VLC's case it uses libdvdcss). You cannot just copy and paste the encrypted data and burn to a disc, you need to decrypt it first. The decrypted data can then be used to make a backup.
VLC can of course read and potentially backup the video, however the best method to make a backup of a DVD-Video would be to use something like
DVD Decrypter of
DVD Shrink which are designed specifically for making DVD backups (the latter is able to compress MPEG-2 video too if the video from a dual layer DVD-9 (8.5GB) needs to fit on e.g. a single layer DVD-5 (4.7GB) disc).
Cheers, Arite.