I used to author DVDs. Indeed, I did a playable demo of Who Wants To Be A Millionaire in 2001, showed it to Ian Livingstone at Eidos (who had the rights) who then did nothing with it. Then Zoo Interactive came along 18 months later, got the rights and sold millions, starting the whole interactive DVD game mini-boom.
Bottom line is that you can't do an NES style game on it. Every piece of video in your game needs to be pre-rendered, encoded to MPEG2 and stored on the disc. So every conceivable action needs to be pre-planned, created as video and encoded. Anything with sprites, polygons or whatever - not possible.
What is possible:
1. Dragon's Lair style games
2. Quiz games (basically using the menu system)
If you really, really wanted to push the envelope you could do Myst - IF you could find a way to save off progress (presumably password related). If you really, really, really wanted to push the spec to absolute breaking point, a point and click adventure along the lines of Monkey Island might be possible - but all the character movements would need to be pre-generated. Tricky.
The real difficulty here is that the DVD spec is so loosely defined, and many players don't adhere to it. Zoo Interactive's WWTBAM for example didn't work on first generation PS2s.
