Let me begin by saying I know very little regarding DVD ripping, servers and sharing so please forgive my ignorance.
On my MacPro in my study I have a spare internal HD which I've named Media and is where my iTunes media is located (the path is: /Volumes/Media/David Music/iTunes Media)
Given my lack of expertise I thought the easiest way to watch a DVD was by using Apples native Home sharing using iTunes.
Do I copy a DVD to the Movies folder at this location and then re-encode before I use my ATV to watch the movie on the TV in my lounge?
If I've got this wrong could you ket me know the correct procedure?
If you want to use iTunes and home sharing with the appletv that is where the files will end up.
For dvds you can just use handbrake. Open source > point handbrake at the DVD > choose/open, select an easy destination at first like the desktop. Select the AppleTV preset on the right click go and wait.
When it's done take that file and drop it in iTunes. Let it copy. It will save to the home movies section. If you want right click it, get info and set it to the movies section you can also edit the title, cover art etc.
Now it will be in that folder you mentioned above and you can delete the original on your desktop although I would hold off until you verify everything worked.
Goto the AppleTV and goto movies, find the title and play it.
Once you get familiar with the programs and process you can refine them to your liking. Adding subtitles, better compression, etc. If handbrake give you a hard time about the DVD (it won't decrypt BD) you can use MakeMKV. Then just point Handbrake at the MKV file and the above generic process is the same.
Using apps that can play mkv will deliver the best quality since it's not compressed however will have the largest file sizes. DVD ~4gb and BD ~30gb. This is why a lot of us use handbrake to compress the files.