The upside of MPEG is that it is the one true cross-platform standard for digital video. It's been around for a long time and people continue to work on it, particularly for use with audio compression. As a web technology MPEG probably isn't the best option due to the lack of MPEG hardware in most web-capable PCs. Generally QuickTime is superior to MPEG in quality, in my opinion. There's now an MPEG extension for the QuickTime plugin, and with this extension you can save MPEG files from MoviePlayer.
MPEG is a standard file format for distribution through web servers. Files come out quite small, though the quality is generally inferior to QuickTime.
Some handy reference material:
The MPEG FAQ
Microsoft's Video for Windows.
AVI is a video format most common in the PC world. The format was developed as a means of incorporating
digital video information into documents under Windows 95. Explorer can play AVI movies inline in the browser.
Extension software exists for the Macintosh to play AVI files, which works well, but is slightly cumbersome to use.
It seems to be most useful for adding video to non-web applications. AVI is a fairly common format for web video
due to it's integration with Windows 95, so it's fairly common to see it on web sites.
AVI files do not stream, so you will link to them with a normal anchor tag. Another fairly common PC video format is Intel's Indeo, which is common in videoconferencing applications.
Resources