How does converting video files to mkv reduces file size ?

[L337G33K]

Hi,

I was just wondering how does converting avi or other video files to mkv (sometimes rmvb, mp4) reduces the file size but without loss of quality. Is there loss of quality ??, which I don't notice because my monitor is small (15").

[Sparda]

There is loss of quality, but relatively small amount. Different codecs are better at reducing size through clever algorithms. For example, MPEG is relay inefficient compared to h.264.