What is compression?
Compression is a process by which files are reduced in size by the removal of redundant or less important data.

Why should you compress your movies?
Compression of videos– videos must be compressed prior to being distributed over the Web to reduce their size for a several reasons. One is so that they will play properly over the distribution media. Another is to ensure a compatible format with the different media players. Other important reasons are for downloading speed by users and storage space for the video.

Basically, compression allows the video to be compressed for upload to your site where it will be stored (Unless you will save to a streaming server) and downloading to your viewers computers. The benefits are good for both the Web designer and the audience, since the size of video before compression is usually very large. Unfortunately, the compression step is not often given enough attention by many Web page developers, yet has a dramatic impact on the final image quality. For instance, a video that is not compressed enough may be too large and take too long to download leading to a loss of your audience, while a video that is compressed too much may appear blurry and pixilated.

Lets look at it in a little more detail.