1.Xvid is a codec which its only formating the videos on MPEG-MPEG2- MPEG4. For example, in MPEG2 the highest format is HD video 1080p and its good
as a videos quality.
2.H.264-high quality video in relatively low bitrates. You can think it as the “successor” of the existing formats (MPEG2, MPEG4, DivX, XviD, etc.) as it aims in offering similar video quality in half the size of the formats mentioned before.
H.264 Related;
*.avi - People also use .avi for H264 videos too!
*.mp4 - QuickTime use this format. Better than AVI as you can store AAC audio as well.
*.m4v - The standard file format for videos for iPods developed by Apple.
*.mkv - Matroska container - can support many video and audio formats.
*.h264 -Not commonly used, but you may download some video files with this extension name from Internet.
4.Both is good,its defend on your resources and output apply.