I suggest you go and have a look at the
DVC part of these boards. They have sticky threads that explain the process. Also a number of other websites such as
AllEars also have pages that explain the process.
The main pro is that you can get access to the DVC units (studios and villas) at a much discounted rate - even lower than when Disney has a cash sale. The main cons would be that when renting you are locked in - once the renter has committed their points to the deal, they will seek your payment and most disallow refunds. So it requires some trust between you and them.
But the websites will explain more fully and precisely than I.
the cost will depend on which DVC resort you wish to stay in, and what type of room - a studio will sleep 4 but perhaps you prefer a 1 bed villa. There are different point requirements for all and I recommend you look at All Ears and their recommended broker service -
David's Vacation Rentals - has a calculator to show the price.
You can add the Dining Plan (at normal cost) to your booking.