CBR stands for Constant Bit rate. What this actually means is that the bitrate doesn't vary much over time. Very few codecs can guarantee exact constant bitrates, so there is almost always some variation.
VBR stands for Variable Bit rate. This means that the bitrate is allowed to vary to a larger amount to maintain better quality over the entire clip.
CBR is useful when streaming video over a severely bandwidth-constrained channels that can maintain fixed speeds, like dialup internet, ISDN, Broadcast television, or Cable or Satellite TV Channels.
VBR is useful when providing video over connections that work better with overall lower speed and occasional spikes of high speed, like broadband internet.
CBR tends to waste space on easy-to-compress sections of video and lose quality on hard-to-compress sections.
VBR tends to produce better quality at any given average data rate.
I generally recommend VBR unless CBR is required for technical reasons.
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