When you want to output your movie to a medium other than videotape, you can output self-contained QuickTime movies, which do not recompress the original video files you captured. They make perfect copies of your original media files and marry them into one media file.
You can also output reference movies when you use a non-self-contained format. These movies appear to be single files to all applications that support QuickTime. They act like normal QuickTime movies when imported into these applications. These non-self-contained movies act like stand-alone media files, but in fact they are files that reference the original media files you edited the sequence from. They play in any QuickTime application only if those referenced original media files are on the same computer. They are not portable like self-contained movies are. Non-self-contained movies do not actually contain any media (picture and sound files). But it's helpful to use these when you can (when the media files they reference are on the same computer). These files are much smaller than self-contained movies and are created faster as well. You can also recompress your video with Final Cut Pro's QuickTime export features.
QuickTime export from Final Cut Pro includes various codecs you can choose to use in your exported file.
Final Cut Pro 4 includes a program called Compressor in addition to its own file compressions.