Read this one below if you want to know. (Just copied from one of the homepages.)
Spoiler »
DivX 3.x Advantages :
Good compression, even though less advanced compression features are used
Better compatibility Disadvantages :
DivX 3.x not entirely legal (hacked codec)
Outdated - does not have advanced compression features of DivX 5.x
Hard to control final file size
DivX 5.x Advantages :
Great for controlling final file size (eg. for fitting onto one 700 MB CD)
More advanced compression features (eg. DivX Pro : multi-pass, bi-directional enc, GMC, Qpel), which may give better compression
Completely legal solution Disadvantages :
DivX Pro not 100% free (free ad supported version or purchase required)
XviD 1.x Advantages :
Great for controlling final file size (eg. for fitting onto one 700 MB CD)
More advanced compression features (eg. 2-pass, bi-directional enc, GMC, Qpel), which may give better compression
Completely legal and open source solution Disadvantages :
Less common than DivX
XviD slightly harder (less consumer friendly) to configure than DivX
Just as an addemdum, not anime fansubbers use XviD, if I recall correctly. Several of the ones I talked to liked it better than DivX 5, though some are still traditionalists and use 3.x.
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