It will be transmitted via stereo plugs. One of two things can happen. Many discs have separate tracks, a regular stereo track(usually mixed with pro-logic in mind, and often labeled as such), and also a DD 5.1 track. You, where possible, will want to select the 2-channel mix. If only 5.1 mix is available, your DVD player will downmix it on the fly to two channel, which you then feed to the receiver, and apply prol-logic processing to get matrixed surround, or leave it in plain stereo if you only have 2 speakers (or prefer it that way).
Hope that explains things, if not I can clarify further.
Oh and to clarify further, there isn't an inherent difference between stereo and Pro-logic. ANY and ALL stereo sources can have pro-logic, pro logic II, circle surround, neo6, logic 7, or whatever other matrix processing you want applied to them. Sources, like older DVDs, VHS tapes, TV programs, whatever that are labeled expressely "Pro-Logic" or Dolby Surround, etc, are just mixed with this in mind, but are still 100% stereo.
Well, so I clarified further anyway for you.
If I made you more confused, then ask and I'll try to clarificate my confusification.
