This article is from the MPEG FAQ, by Frank Gadegast firstname.lastname@example.org with numerous contributions by others.
A brief summary myths.
1. Compression Ratios over 100:1
Articles in the press and marketing literature will often make the
claim that MPEG can achieve high quality video with compression ratios
over 100:1. These figures often include the oversampling factors in
the source video. In reality, the coded sample rate specified in an
MPEG image sequence is usually not much larger than 30 times the
specified bit rate. Pre-compression through subsampling is chiefly
responsible for 3 digit ratios for all video coding methods, including
those of the non-MPEG variety.
2. MPEG-1 is 352x240
Both MPEG-1 and MPEG-2 video syntax can be applied at a wide range of
bitrates and sample rates. The MPEG-1 that most people are familiar
with has parameters of 30 SIF pictures (352 pixels x 240 lines) per
second and a bitrate less than 1.86 megabits/sec----a combination
known as "Constrained Parameters Bitstreams". This popular
interoperability point is promoted by Compact Disc Video (White Book).
In fact, it is syntactically possible to encode picture dimensions as
high as 4095 x 4095 and a bitrates up to 100 Mbit/sec. With the advent
of the MPEG-2 specification, the most popular combinations have
coagulated into Levels, which are described later in this text. The
two most common are affectionately known as SIF (e.g. 352 pixels x 240
lines x 30 frames/sec), or Low Level, and CCIR 601 (e.g. 720
pixels/line x 480 lines x 30 frames/sec), or Main Level.
3. Motion Compensation displaces macroblocks from previous pictures
Macroblock predictions are formed out of arbitrary 16x16 pixel (or 16x8
in MPEG-2) areas from previously reconstructed pictures. There are no
boundaries which limit the location of a macroblock prediction within
the previous picture, other than the edges of the picture.