The DVD file extension is used by CloneCD when burning DVD data to a disc. The .dvd files contain DVD information, contains usually only a few bytes in size, but required to burn data to a disc. DVD files are saved along with much larger data files, typically with extensions ".000," ".001," ".002," etc.
The DVD file extension is used for Driver for devices used with MS-DOS. DVD file enables communication between the operating system and the hardware device. Files ending with ".DVD" are not DVD movies -- see .VOB instead.