Using VLC as a video capture device

I have yet to use, or even see,a full-feature product like VLC Media Player. I have used it to test video streams, I have used it to play videos, and the list goes on. These past few days, I have been trying to see if I can use it as a video-capture device. I have been using an ancient Logitech E3500 USB camera that does not have the best resolution. I bought it about 12 years back. It still works great though. Anyway, back to the program. I have been fooling around with VLC but this program is so powerful, I am only just scraping the surface of all it can do. I have been taking video captures but the file sizes are HUGE. But with a little help from the people at VLChelp.com I have managed to get my recordings to be smaller in size. as I said, I am still experimenting with VLC to see the other options I can use and so far, it looks good.