MP4 is a new container format, a container format allows you to combine different multimedia streams into one single file. Multimedia containers are for example the well known AVI, MPEG , Matroska, OGM.
MP4 is the global file extension for the official container format defined in the MPEG-4 standard. MP4 is streamable and supports all kinds of multimedia content, multiple audio-, video-, subtitlestreams, pictures, variable-framerates, -bitrates, -samplerates...) and advanced content like 2D and 3D animated graphics, user interactivity, DVD-like menus.
doom9 MP4 FAQ