Have you seen the Simpsons episode 'Bart's Comet', where Principal Skinner is looking through his telescope, reeling off co-ordinates, each time followed by "no sighting"? Well uncompressed video is kinda like that. Just as there was no need for Bart to note down every "no sighting", we don't necessarily need to know the value of every pixel of every frame of a movie.
Take the appended diagram of a video. It's 4 frames of pure black. The uncompressed data for this video would look something like this (it doesn't really look like this but it works as a representation of the compression involved):
Frame 1:
Pixel 1A: R 0, G 0, B 0
Pixel 1B: R 0, G 0, B 0
Pixel 1C: R 0, G 0, B 0
Pixel 1D: R 0, G 0, B 0
Pixel 2A: R 0, G 0, B 0
Pixel 2B: R 0, G 0, B 0
Pixel 2C: R 0, G 0, B 0
Pixel 2D: R 0, G 0, B 0
Pixel 3A: R 0, G 0, B 0
Pixel 3B: R 0, G 0, B 0
Pixel 3C: R 0, G 0, B 0
Pixel 3D: R 0, G 0, B 0
Pixel 4A: R 0, G 0, B 0
Pixel 4B: R 0, G 0, B 0
Pixel 4C: R 0, G 0, B 0
Pixel 4D: R 0, G 0, B 0
Frame 2:
Pixel 1A: R 0, G 0, B 0
Pixel 1B: R 0, G 0, B 0
Pixel 1C: R 0, G 0, B 0
Pixel 1D: R 0, G 0, B 0
Pixel 2A: R 0, G 0, B 0
Pixel 2B: R 0, G 0, B 0
Pixel 2C: R 0, G 0, B 0
Pixel 2D: R 0, G 0, B 0
Pixel 3A: R 0, G 0, B 0
Pixel 3B: R 0, G 0, B 0
Pixel 3C: R 0, G 0, B 0
Pixel 3D: R 0, G 0, B 0
Pixel 4A: R 0, G 0, B 0
Pixel 4B: R 0, G 0, B 0
Pixel 4C: R 0, G 0, B 0
Pixel 4D: R 0, G 0, B 0
Frame 3:
Pixel 1A: R 0, G 0, B 0
Pixel 1B: R 0, G 0, B 0
Pixel 1C: R 0, G 0, B 0
Pixel 1D: R 0, G 0, B 0
Pixel 2A: R 0, G 0, B 0
Pixel 2B: R 0, G 0, B 0
Pixel 2C: R 0, G 0, B 0
Pixel 2D: R 0, G 0, B 0
Pixel 3A: R 0, G 0, B 0
Pixel 3B: R 0, G 0, B 0
Pixel 3C: R 0, G 0, B 0
Pixel 3D: R 0, G 0, B 0
Pixel 4A: R 0, G 0, B 0
Pixel 4B: R 0, G 0, B 0
Pixel 4C: R 0, G 0, B 0
Pixel 4D: R 0, G 0, B 0
Frame 4:
Pixel 1A: R 0, G 0, B 0
Pixel 1B: R 0, G 0, B 0
Pixel 1C: R 0, G 0, B 0
Pixel 1D: R 0, G 0, B 0
Pixel 2A: R 0, G 0, B 0
Pixel 2B: R 0, G 0, B 0
Pixel 2C: R 0, G 0, B 0
Pixel 2D: R 0, G 0, B 0
Pixel 3A: R 0, G 0, B 0
Pixel 3B: R 0, G 0, B 0
Pixel 3C: R 0, G 0, B 0
Pixel 3D: R 0, G 0, B 0
Pixel 4A: R 0, G 0, B 0
Pixel 4B: R 0, G 0, B 0
Pixel 4C: R 0, G 0, B 0
Pixel 4D: R 0, G 0, B 0
But if we use spatial compression we need only note this:
Frame 1:
Pixel 1A to 4D: R 0, G 0, B 0
Frame 2:
Pixel 1A to 4D: R 0, G 0, B 0
Frame 3:
Pixel 1A to 4D: R 0, G 0, B 0
Frame 4:
Pixel 1A to 4D: R 0, G 0, B 0
And if we use temporal compression we need only note this:
Frame 1 to 4:
Pixel 1A to 4D: R 0, G 0, B 0
Obviously not many videos are like this, but think of the credits of a movie, when most of the screen will be black for about 8 mins.
The actual compression used in the videos you made in Handbrake is a lot more complicated than this, but this should give you a sense of the principle of throwing out the unnecessary data. The next stage on from what I illustrated above is deciding what colours are close enough that we can treat them as a single colour without losing too much image quality, and what is close enough to not moving that we can treat it as stationary. The smaller you attempt to make the video file size, the more lenient you have to be in this regard.
EDIT: DV is not uncompressed, it's just compressed in a very basic way when compared to H.264. A lot more can be squeezed.
I think I deserve a gold star for this.