2) Acronym for "Digital Video Express", the failed DVD rental format from Circuit City. They way it worked was once you "activated" the Divx DVD movie, it would lock you out after 48 hours, at which point you could unlock it for another 48 hours, or buy the full movie and unlock it permanently. Never really caught on, mainly because you could only play Divx movies on Divx-enabled DVD players.
2) "Haha, you actually bought a Divx player from Circuit City? What, were they out of Betamax players?"
Divx files have a .avi or .divx extension. Divx is probably the second most ubiquitous video format in existence (bested only by the DVD-Video format, you may already have a divx-capable DVD player and not knowing it), and the most common format for sharing movies on the internet.
The downside is that making a good quality divx file takes some skills. It's also possible to put subtitles and menus inside divx files.
2) Divx HD, Divx 7 or MKV, is the name of a video format, which can store high definition video (same quality as Bluray), and up to 5.1 audio. Divx HD files are basically MKV files, but with tighter guidelines regarding audio compatibility. Divx HD (MKV) files are generally smaller than Bluray files, around 13GB. Even smaller file sizes can be achieved by throwing some quality out, thus allowing for an HD movie to fit in a dual layer DVD (7.9GB).
MKV is the most common format for sharing high definition movies on the internet. Bluray players with support for Divx HD/MKV have recently started to appear on the market.
2) Some Bluray players are Divx HD/MKV-capable, allowing you to play HD movies downloaded from the internet. Unfortunately the PS3 is not.