When you choose to use a DVD RW "like a USB flash drive," it initiates a process called "Live File System" formatting. This formatting is necessary because it prepares the disc to allow drag-and-drop file management, similar to how you would manage files on a USB flash drive.
This formatting process would indeed empty the disc if it previously contained data. If the disc was already empty, it simply prepares the disc for the intended use.
This is a standard process for making a DVD RW usable in a more flexible manner. It ensures that the disc can handle the operations you expect from a USB flash drive.