Nero Video is set to "Keep source quality" per default. So your resulting DVD, AVCHD, Blu-ray will maintain the quality and look as good as the original video file. However this can result in some content not fitting on the desired target disc. You can notice this via the red section in the Full-O-Meter.
Even with this warning present you can proceed with defining your menu and proceed to the final page before burning. On this pages there will be more details on the matter. To resolve it please click on "Options > Recording Format Options".
In the upcoming window please click on the tab named with the disc type (e.g. DVD-Video) and change the setting from "Keep source quality" to "Fit to disc".
As a result Nero Video will set the picture quality just right to fit your movie on the target disc.