Theora is our video codec, based on the VP3 codec donated by On2 Technologies. We've refined and extended it, giving it the same future scope for encoder improvement Vorbis has. See http://theora.org/ for more information.
Alpha 4 is the latest release. The bitstream format is frozen. Every file created with the alpha 3 encoder (and, of course, later encoders) will be playable with future decoders. Beta 1 will be the next release.
It would be nice if somewhere it could be explained if Theora is a format appropriate for editing video - such formats would not do frame to frame compression and the file size and processor load would be smaller. On the other hand a distribution format would want to pack in a lot of compression which would mean using frame to for compression.