A coding tool (video codec) is software or hardware that compresses and decompresses digital video. In the context of video compression, codec includes encoder and decoder, while a device that only compresses is typically called an encoder, and one that only decompresses is a decoder.
The compressed data format usually conforms to a standard video coding format.
The compression is typically lossy, meaning that the compressed video lacks some information present in the original video. A consequence of this is that decompressed video has lower quality than the original, uncompressed video because there is insufficient information to accurately reconstruct the original video.
There are complex relationships between the video quality, the amount of data used to represent the video (determined by the bit rate), the complexity of the encoding and decoding algorithms, sensitivity to data losses and errors, ease of editing, random access, and end-to-end delay (latency).