Source is http://best-damn-codec.blogspot.com/...-matroska.html
Matroska or MKV (Matroska Multimedia Container) is not a video compression standard, it's a video container file format, just like AVI, MP4, QuickTime, etc. Matroska can encapsulate video in different codecs, up to 16 audio tracks, picture and subtitles in different languages in one file, which is its most obvious feature.
Matroska file defines four types of files: .MKV for video file (it can also contains audio and subtitles), .MKA for audio-only file, .MKS for subtitles only file and .MK3D for stereoscopic video file.
MKV vs. AVI
AVI is an old video format file that it's nearly 20 years old. AVI's structure is too old to support new video and audio codecs; and it's not convenient to use AVI files in other Operating Systems except Windows OS. Matroska is to replace old media encapsulation file formats, especially to replace AVI. MKV is an open standard free container format. It can be used in different platforms and has many advanced features.
MKV integrates with error handling codes which AVI does not have. The error handling codes enable MKV file to play smoothly when it's not completely downloaded, which is unthinkable to AVI file.
Besides, MKV supports VFR (Variable Frame Rate) codecs, which can reduce the file size and improve the quality of moving picture.
After all, AVI has been applied for nearly 20 years, thus has much more software and hardward support than MKV. So far, seldom programs and players are able to play or edit MKV files.
For more info about MKV, go to http://www.matroska.org