Xvid (formerly 'XviD') is a video codec library following the MPEG-4 video coding standard, specifically MPEG-4 Part 2 Advanced Simple Profile (ASP). It uses ASP features such as b-frames, global and quarter pixel motion compensation, lumi masking, trellis quantization, and H.263, MPEG and custom quantization matrices.
This format was originally created as an alternative to mp3. The idea was to achieve a small file size with better sound quality. The first versions weren’t quite successful, but with the development of AAC, it became possible to store sound with less loss of quality, and with the same file sizes as that of mp3.