How many bytes VARCHAR datatype will occupy if i passthe string 'PRESTON'

and explain the reason also?

7 Bytes, but a VARCHAR column (populated or not populated) always takes up 2 extra bytes to store the length. If the column is defined as nullable, it uses one extra byte (regardless of whether the column is null or not null).

CREATE TABLE - IBM DB2 9.7 for Linux, UNIX, and Windows
Check Table 4. Counts of Columns by Data Type.