WebSanity recommends MP4/M4V
Generally, WebSanity recommends that you try to use MP4 as your video codec and then upload your videos to YouTube to disseminate them on the Web.
MP4/M4V is a widely-supported, internationally-standardized file format that is currently your best option for video on the Web. MP4/M4V files will play on both Windows and Mac computers, and also on virtually all modern mobile devices made by most manufacturers. WebSanity highly recommends that you encode and save your video in the MP4 format.
Other formats
WebSanity recommends MP4/M4V, but there are other video formats out there. Some are better than others for Web videos.
WMV
Short for Windows Media Video, this is a Microsoft-centric format. As such, you can’t count on WMV movies to play on anything but computers running Windows (that means, no Macs, no iPads, no iPhones, no Linux computers—all in all, quite a big percentage of devices that might access your movies).
AVI
Audio Video Interleave (AVI) is a multimedia container format introduced by Microsoft all the way back in November 1992. As such, it’s pretty outdated and should be avoided.
FLV & Flash
Flash is a proprietary multimedia software currently owned by Adobe that can be used to create animations and also as a container for videos on the Internet (hence the FLV, which stands for Flash Video). Although widely used, Flash is starting to lose its dominance for a variety of reasons, among them that none of Apple’s mobile devices—iPods, iPhones, and iPads—support the format. There are other reasons as well, which WebSanity would be happy to discuss with you. That said, it’s going to be a long time before Flash stops being used.
One thing you should know, however: as of November 2011, Adobe has announced that it is killing off development of Flash for mobile devices (smartphones, tablets, etc.)
WebM
WebM is a patent- and royalty-free format overseen by Google. It’s new, and it’s only supported by the Firefox, Chrome, and Opera browsers. This means, therefore, that Internet Explorer and Safari do not—and most likely, will never—support the WebM format, which at this time comprise between one half and two thirds of all browsers.
MOV
Movies saved using Apple’s QuickTime format have the MOV extension. It’s a modern, feature-rich format that became the basis for the international standard MP4 format. That said, MOV always works on Macs, but only works on Windows computers with QuickTime installed (granted, this is most of them).