DVD Studio Pro creates SD DVDs...and also HD DVDs. Not BluRay, but the format that lost to BluRay...HD DVD. Those will only play on Macs, and Xbox 360s.
The way to make the best quality SD DVD is to output a self contained QT file...full quality. Take that into Compressor, apply the BEST QUALITY DVD setting that matches your total running time...and then take the resulting files into DVD Studio Pro, and author.
Now, for a DVD from an HD source, look to the right side and select the "general tab" in the track editor in DVD STP, and see the Display Mode, and select "16:9 pan-scan." Or choose PAN & SCAN and LETTERBOX...this way it'll detect if the monitor is 4:3, or 16:9, and act appropriately.