The video size 720x480 is not larger than 640x480 to provide a better image. The size was arrived at for a number of reasons, mostly related to old TV.
DVD video is a fixed size, 720x480 for NTSC (North America) and 720x576 for PAL (Europe). The size remains the same regardless of whether the show is fullscreen (4:3), widescreen (16:9) or very widescreen (2.35:1). That is termed anamorphic. The dvd contains information that tells the player what size (aspect ratio) to stretch it to.
If the screen is say 1366x768, a fullscreen show will be stretched to 1024x768 (black bars on the sides), a widescreen show will be stretched to 1366x768, a very widescreen picture will be stretched to 1366x582, black lines top and bottom.
Note in the last one I said picture, not show. In almost every case, 2.35:1 shows are actually a 16:9 format with black bars already added top and bottom, the whole thing being stretched to 1366x768 (actual picture area will be 1366x582). Confusing isn't it?