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I was going write up a nice, concise article on packed bitstreams but after a little bit of research my eyes started glazing over. I'm not really a video expert. Lets just say it can be bad for videos played on DivX certified DVD players and leave it at that. You'll know your videos have it when as the camera pans on the video you're watching the movement is very jerky. It can be very annoying, especially once you notice it.
If you really need to know more, here is a Google search box for you.