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 3 is the latest release. The bitstream format is frozen. Every file created with the alpha 3 encoder will be playable with future decoders. Beta 1 will be the next release.