Video is "streamed" over the Internet and played in real time on the user's computer. Playback begins shortly after streaming starts. No files are downloaded or stored on user's hard drive.
The video file is downloaded in its entirety to user's computer, where it is then viewed using one of several video players.
What it's good for
Videos over three minutes.
Live broadcasts of concerts, news events, or corporate presentations.
Videos under 3 minutes.
Low-budget projects.
Movies requiring absolute control over image quality.
Download time
Seems to load quickly because playback begins almost immediately.
Potentially slow downloads with nothing to entertain you while you wait.
Playback quality
Playback quality varies, depending on connection speed, available bandwidth, and other factors.
Frame rate erratic.
Image quality unpredictable.
Playback quality is consistent and smooth, though download size restrictions may necessitate lower quality video.
Image quality and frame rate are determined in editing process.
Equipment required
Requires special streaming servers, which are expensive both to buy and to operate because they use so much bandwidth (although some are available free).
No special server required.
Advantages
Instant gratification.
Allows for longer video.
Doesn't save to user's hard drive (good for saving memory and preventing intellectual theft).