There are three formats with a reasonable level of support: H.264 (MPEG-4 AVC), OGG Theora (VP3) and WebM (VP8). See the wiki linked by Sam for which browsers support which; you will typically need at least one of those plus Flash fallback.
Whilst most browsers won't touch AVI, there are some browser builds that expose all the multimedia capabilities of the underlying OS to <video>. These browser will indeed be able to play AVI, as long as they have matching codecs installed (AVI can contain about a million different video and audio formats). In particular Safari on OS X with QuickTime, or Konqi with GStreamer.
Personally I think this is an absolutely disastrous idea, as it exposes a very large codec codebase to the net, a codebase that was mostly not written to be resistant to network attacks. One of the worst drawbacks of media player plugins was the huge number of security holes they made available to every web page exploit. Let's not make this mistake again.
The current HTML5 draft specification does not specify which video formats browsers should support in the video tag. User agents are free to support any video formats they feel are appropriate.
The HTML specification never specifies any content formats. That's not its job. There's plenty of standards organizations that are more qualified than the W3C to specify video formats.
That's what content negotiation is for.
<img> element.<style> element.<script> element.<object> and embed elements.<audio> element.Why should it specify one for the <video> element?
Source: Stackoverflow.com