Yes, there are a few games that do support DPL officially, such as Wave Race: Blue Storm and Hitman 2. As far as "classics" go, Ocarina of Time, Majora's Mask, Perfect Dark, Jet Force Gemini, and Conker support DPL as well.
For statements below, don't take too seriously cuz I haven't gotten all my facts straight yet, but if it makes sense, it makes sense.
You have a 5-channel system (Left, Right, Center, rear Left, rear Right) and you're playing a 4-channel DPL game (Left, Right, Center, Rear/surround). What your sound system will do is take the Left and Right audio sources (from the red/white pair of analog RCA cables), finds specific types of audio that's common to both channels, joins that audio and dedicates it to one speaker, the Center-channel. Your Left/Right speakers will try to only output audio that's specifically Left-oriented or Right-oriented. So, that covers 3 speakers. The DPL Rear/Surround channel is just a single audio channel that accompanies the normal L/R audio channels. The DPL decoder separates that rear channel and outputs it to both the rear Left and rear Right speakers, effectively making "one big" surround channel since the rear speakers spit out the same audio. "One big" audio channel isn't so weird, as 5-speaker setups were commonly used during the Hi-Fi VCR era, where VHS movies (and TV shows) did support "Dolby Surround" that can be heard thanks to a DPL receiver. Theoretically, DPL rear audio could be output just fine with "one big rear speaker," but I guess having 2 rear speakers made a better "wall" of surround-channel audio.
DPL II goes one clean step further than DPL by providing 2 unique L/R rear channels instead of "1". I think DPL II handles deep-bass better in order to take advantage of a sub-woofer, though I'm not sure.
It's funny though, Rebel Strike appears to be the first game to support 7.1 using DPL IIx, which adds another pair of rear L/R channels (so you'll end up with 2 speakers close beside you and 2 behind you). However, I've yet to see a DPL IIx receiver.