The difference between media types is the wavelength of the laser which is needed to read them.
Initially, CD lasers with a wavelength of 780 nm were used, being
within infrared range. For DVDs, the wavelength was reduced to 650 nm
(red color), and the wavelength for Blu-ray Disc was reduced to 405 nm
(violet color).
taken from https://en.wikipedia.org/wiki/Optical_disc_drive
The other difference is the power needed to read or write the media. For writing the disc drive has to output much more power then for reading.
It would be possible to use different lasers for this different purposes, but this is to expensive.
Todays optical drives use so-called "semiconductor lasers". These lasers allow to change the output power and wavelength electronically by the so-called "driver". You can take a look at an example of such a driver here:
https://www.maximintegrated.com/en/products/interface/MAX9483.html
To achieve the different power levels and wavelenghts the driver has to be powered differently. So in your case I would guess that some electronic part which is in charge of the driver has partially failed. Leading to the drive no longer being able to maintain the correct values needed for reading CD-RWs.