Doug: I believe it's some type of compressor for mpeg movies or at least you need a divx decoder to view some mpegs on the internet. It may also be popular with people making their own movies, I'm not really sure.
DivX, in this case, is indeed a COmpression / DECompression (CODEC) technology.
This particular group started out by releasing a CODEC called DivX ;-), which is still enormously popular. It is basically a binary hack of Microsoft's MPEG4 V3 CODEC (they deny this, of course, but the similarity in the binaries is… let's just say "incredible").
The Microsoft CODEC, while free, was limited to the not-quite-as-good MPEG4 V2 for non-Microsoft file format outputs. This created a huge market for the DivX ;-) hack, which was later improved by a small utility which recognized "scene changes" and made the first frame of every new scene a "key frame" (mpeg technology basically works by saving only the changes for all frames except the key frames, which are saved completely).
The group (or key members, anyway) then started "Project Mayo", whose primary function was to develop OpenDivX, a new MPEG4 CODEC, from scratch. Initial versions of OpenDivX were unsuccessful in supplanting DivX ;-) for a number a reasons (despite a better "quality to megabytes" ratio) - primarily a massive increase in CPU usage and a number of small irritants (such as scaling bugs).
MPEG4 CODECs are certainly among the very best options today for high-quality in a low file-size environment. There are also certain content control possibilities built into the standard (but which are not widely used by actual CODECs).
If digital cameras offered MPEG4 compression instead of MPEG2 (there is no MPEG3, being considered too likely to confuse due to the widely used misnomer "MP3", which is actually MPEG Audio Layer 3) I would certainly not hesitate to buy that instead. The main issue is that the computational resources required (both under compression and decompression, but compression is of course the (much) more CPU hungry) are so much higher. There are rumors of a few devices expected to feature MPEG4 video, but I've yet to see any in stores.
Anyone wishing to convert existing home videos to a digital format would be well-advised to go with an MPEG4 codec. The compression ratio achievable is simply astounding.
Using the latest MPEG4 CODECs and special utilities enabling you to adapt the bit-rate (all the MPEG4 codecs I've come across are constant bit-rate in their "natural" versions) freely for each scene, you can actually squeeze a 2 hour DVD movie (which uses MPEG2 for video, btw) on a single CD at roughly SuperVHS quality. This is not legal to do without the express authorization of the copyright holders in a number of countries (even if you keep it simply as a backup or to view on the computer).
On a side note, MPEG4 videos are not always found as mpeg-files (e.g. myvideo.mpg or .mpeg), but also (and perhaps more commonly, especially in Windows land) as AVI-files. The interesting thing with AVI is that it doesn't specify a CODEC - but simply a method of interleaving the audio and video streams (AVI is short for Audio Video Interleave). Sound and video can then proceed to use any CODEC available (and not necessarily the same).
-fyo |