Uh, yeah you got the idea. The DVDs are for easy and quick storage. NOT for compatibility with a home DVD-player. The format of the files are not the same as MPEG2 used on home DVD-players. Many of them are more efficient modern MPEG4 compression. Holds about 5-10x as much video per gig as the older MPEG2 standard. The only advantage to the DVD camcorders is they have higher-capacity than micro/miniDV tape. They can be transfered to your computer much faster than downloading through firewire/USB2. Just pop the DVD out of the camcorder, drop into your PC's DVD drive, fire up the video-editing software and you're into production within seconds.
There are additional pieces of data that needs to be formatted onto the DVD before it will play in the home-player decks. Stuff like menus, chapters, language options, region-coding, etc. All of which needs to be done in post-production as part of the mastering process after the shoot is over. There's a reason video-productionn costs $1000 per finished minute.