How to erase DVD-RW in Disk Utility
Go into Finder and right click on the DVD, there should be an option "Erase rewritable disk". Apparently that's how to erase disks in El Capitan.
For anyone running High Sierra (10.13) or a similar version where a rewritable CD or DVD can't be erased from Finder because MacOS can't read it
use the the terminal instead:
drutil -drive 1 erase full
See the manual for the full usage (man drutil) and ensure drive 1 is the particular drive you want if you have multiple.
This can happen, for example, if you have burned a live Linux image that must be bootable.