This is my assumption, please correct me if I'm wrong:

It will play files such as .avi that has been encoded with a divx/xvid codec. You can make "DATA" dvds with these avi files and the DVD player will play it. The benefit is like 4 to 6 movies on 1 data dvd.

Am I correct?
Just trying confirm my assumptions. If they are wrong, please educate me. Thank you.