The Xvid Codec is an open source MPEG-4 codec for encoding and decoding (playback)
What is the Xvid codec:
The Xvid Codec (formerly capitalized differently: XviD) is a video encoding and decoding (playback) codec designed to compete with the popular DivX codec.
Who developed the Xvid codec?
Xvid is a continuation of Project Mayo (original open source project responsible for the commercial DivX codec) and aims to develop a high quality open-source MPEG-4 codec. Unlike DivX, Xvid remains open-source.
Why should I use the Xvid codec?
The quality of the codec is extremely good (in most cases, better than DivX), and encoding speed is very fast as well, so it is at least worth a try. Plus it's free :)
Most encoding software that supports DivX encoding will also support Xvid encoding. The same goes for multimedia players, and standalone players.