H.264 is a standard for video compression and one of the most widely used HD video formats. Software routines which implement standards such as this one are known as "codecs" (for "coder-decoders") because the encode and decode video data. They are an essential part of any system that plays or creates digital videos, and can be a component of systems that deal with all sorts of file formats that use a particular standard for encoding or compression as a part of their format.
H.264 is controversial for being patent-encumbered, and hence subject to royalty requirements. In 2013, Cisco is attempting to partially remedy this by producing a freely distributed executable H.264 codec for many platforms for which they have paid the royalty, allowing anybody to download and use it in unmodified form royalty-free. The source code is also openly available, but any altered versions that anybody might create from it would require separate licensing, as would any distribution of the executables other than direct download from Cisco. Thus, the only way to use it as part of a product without additional license fees is to have the product's installer download the executable from Cisco during the install process, rather than including it directly in your own product (whether on disk or downloadable from your site).
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