The cheapest way to send DVDs within Australia.[24 Aug 2012 - I have updated prices.]
As a resident of western NSW in an isolated community, I rely on eBay and other websites for many purchases. I'm seeing an increasing trend for sellers to start DVD auctions at 99c, but inflate postage costs to compensate. I don't know about you, but I object to being asked to pay $8-$10 in postage for a DVD.
At standard Australia Post charges, small parcels within Australia cost $6.60 for less than 500gm, plus the cost of the padded bag or box. However, for only $1.40 you can buy a C5 Plain Prepaid Envelope measuring 229mm x 162mm - that cost is for the envelope and postage within Australia. Check this out at your local P.O. or online (http://auspost.com.au/personal/stamps-prepaid-envelopes.html), there are other sizes as well, and they can be used for many things other than DVDs.
A C5 envelope can be used to send up to 500gm, not exceeding 20mm thickness, anywhere within Australia, and is perfect for a standard DVD case. A single DVD in its case weighs about 85gm; a 2-DVD set about 120gm; and a 4-DVD set about 160gm; so any of these fit the weight limit for one of these envelopes.
Now, these are just envelopes, so there's little protection. However, even sending in a padded bag doesn't guarantee the DVD will arrive safely. I've had DVDs arrive damaged in padded bags because the disc came loose inside the case*. You can wrap the case in a single layer of bubblewrap and still get away with 20mm thickness. Even adding $1 for the extra trouble of bubblewrapping only puts the cost up to $2.40 (buyers, remember a new cover can always be bought for about 50c at any bargain store if the original is damaged).
So stick to the sellers who charge a reasonable amount for postage, no more than $4-$5. The others either don't know the best way to do it, or they're trying to make their profit on the postage (and cut down on their ebay fees).
[14 Jan 2013] It has been pointed out to me that using these prepaid envelopes makes the purchase ineligible for PayPal Buyer protection, which requires tracking of the parcel. If this is required, Registered Post or some other (more expensive) form of tracking will need to be used.
* You can avoid the disc coming loose by cutting a piece of bubblewrap, doubled over, to go inside the case and hold the DVD firmly in place. A single layer can be used for 2-DVD sets, or two pieces for 3- or 4-DVD sets, as shown below.