Here's the current state of HTML5 video: Microsoft and Apple are betting on H.264, Firefox and Opera are rooting for WebM, and Chrome does both. Although Internet Explorer 9 supports H.264, excluding all other codecs, Microsoft says it is making an exception for WebM, as long as the user installs the corresponding codec. At the same time, Microsoft is still pushing H.264 support and its first target is Mozilla.
The Mozilla Foundation refuses to provide support for H.264 in Firefox because it's against their open nature. The code is also too expensive; the H.264 patent license agreement isn't cheap, and is also extremely limited in what it allows. Since Windows 7 has built-in support for playing H.264 content, Microsoft's solution is to let Firefox tap into that capability.
It's still not a full-proof solution for Firefox users. Not only will they need to download the plug-in, they will need to be running Windows 7. Most Firefox users are probably using Microsoft's latest and greatest, but a large portion are either using Mac, Linux, or an older version of Windows.
"The Extension is based on a Firefox Add-on that parses HTML5 pages and replaces Video tags with a call to the Windows Media Player plug-in so that the content can be played in the browser," according to the release notes. "The Add-on replaces video tags only if the video formats specified in the tag are among those supported by Windows Media Player. Tags that contain other video formats are not touched."