Okay, let’s start from the top shall we?
Daz renders your video initially as a series of single images. Think of it like a comic book, with each image being a single frame. It then uses a video compression codec to turn that image sequence into a video file. The type of image you get out of it depends heavily on what codec you use and what compression levels you’re using.
Basically high compression = low quality, smaller file. Low compression = high quality, larger file.
Different codecs have different ways to compress data, and are compatible with different players. One vital thing to know is that MPEG is *not* the codec it is a container file. Think of it as the wrapper of a candy bar. The candy is your encoded movie file, and the wrapper is telling you what’s inside. AVI, MPEG and OGG are all examples of container files. They tell your computer which codec to decode the movie with. Many can also store extra information such as subtitles, but we’ll not get into that too much here.
In short, the file extension is just the wrapper. The real candy is how the file was originally encoded, and for that you need a decent codec. I believe there are some decent encoders on download.com but do take care when installing anything from that site. Lately they just LOVE to throw adware into almost everything, so always do a custom installation and uncheck all of the toolbars and other useless junk they try to throw at you.