It depends on the movie. A lot of times you see deleted scenes and can see why they were cut. Other times, you see the deleted scenes and wonder why they were taken out (An example is "Keeping The Faith"...we rented this one time...it's a dull movie and not worth seeing, but there is one deleted scene that made us laugh harder than anything that was kept in the actual movie, and we couldn't understand why they didn't keep it).
As for LOTR, the scenes aren't deleted, they are actually "new" scenes filmed specifically for the DVD release, which is why they are integrated right into the film, and not "extras" that you have to watch seperately, out of context. They did this because in theatres, they have to keep running times within a certain limit so they can show the movie every couple hours and keep new people buying tickets. On video, they don't have such time constraints. Lucas did this for Episode I (although the scenes didn't really add anything to the story), and I think he did this for the Episode II release as well.