Both "encode" very similarly. The key difference is that "constant" keeps the same bitrate for the video across the board. This is okay for static shots without a lot of movement. For something like Star Wars, it's a terrible choice because there are alternating scenes of action and non-action. If you set thed bit-rate too low, then an explosion will not be encoded well, resulting in loss of definition or macro-blocking. If you set it too high, then static scenes, like static shots like characters standing around talking to each other eat up bandwidth that could be better used on action scenes.

Variable bitrate (otherwise known as 2nd pass, and occasionally 3rd, 4th, etc., depending on the encoder) will go through and analyze the video to determine the best bit rate for each scene. This is nice, because static scenes are given a low bit-rate, which saves it for scenes which need a higher bit-rate, like explosions. Since the bit-rate use is more efficient, you save disc space as well.

The downside: it can take a lot longer to compile the video, since you are essentially doing it at least twice, if not more. Don't expect to do much with your computer while it's doing this. (Which is a major reason why I set up two.

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