Xvid (formerly XviD) is an open source MPEG-4 video codec written based on OpenDivX. Xvid was developed by a group of original OpenDivX volunteer developers after OpenDivX ceased development in July 2001. Xvid supports multiple encoding modes, quantization (Quantization) method and range control, motion detection (Motion Search) and curve balance distribution (Curve), dynamic key frame interval (I-frame interval), psychological visual brightness correction, and credits Options, external custom control, motion vector acceleration (Hinted ME) encoding, picture optimization decoding and many other encoding technologies are very powerful for users.
Xvid's main competitor is DivX. But Xvid is open source, while DivX only has free (not free) and commercial versions.
Learn about Divx:
http://edu.codepub.com/2009/0530/4863.php 
