There got to be compression involved. For example, Windows 7 setup image is only around 2.5GB but a fresh installation of Win7 takes more than 10GB.
As in your case, don't copy the full contents of the DVD. Make an image of the DVD (.iso or .img) and use program such as PowerISO to open the image. You then can edit the contents. Once done, create a new disc from the modified image.