Banding and blocking are associated with low bitrates. Bitrate is a key consideration in video encoding. Either it is constant, where you set a value of 2000 kbits, 5600, etc. and Handbrake sticks to it, or variable, where you set a quality rate factor, and Handbrake then adjusts bitrate on the fly to maintain quality X. Variable approaches will provide an average bitrate.
Occasionally DVD sources will compress really inefficiently: no matter how much bitrate you throw at it, the encoded result is substantially worse than source. But typically I’ve found RF 18-21 does a good job. I use mediainfo to ascertain bitrates and other information.
I pulled these settings from a DVD profile I made. They go in the ‘More Settings’ box