The Mozilla Foundation cannot, and will not, provide support for H264 in Firefox, for the simple reason that it's against their open nature, and, of course, because it's too expensive; the H264 patent license agreement isn't cheap, and on top of that, extremely limited in what it allows.
However, Windows 7 has built-in support for playing H264 content, so why simply not allow Firefox to use that? Microsoft thought so too, and decided to release its own plugin that allows Firefox to hook into Windows 7's native H264 support.
"H.264 is a widely-used industry standard, with broad and strong hardware support. This standardization allows users to easily take what they've recorded on a typical consumer video camera, put it on the Web, and have it play in a web browser on any operating system or device with H.264 support, such as on a PC with Windows 7," Microsoft told CNet, "The HTML5 Extension for Windows Media Player Firefox Plug-in continues to offer our customers value and choice, since those who have Windows 7 and are using Firefox will now be able to watch H.264 content through the plug-in."
The plugin has its limitations - for instance, right now, it uses the Windows Media Player API for its controls, but Microsoft wants it to use those defined by the HTML5 standard instead. There's also an issue when pages call to
canPlayType to determine if the browser supports H264; in that case, even with the plugin installed, the video won't play. Microsoft is working on fixing these issues.
It's an interesting proposition, and will surely come in handy for those using Firefox on Windows 7. Still, WebM is a far better choice for HTML5 video due to it not being governed by a patent troll, and because it's open source and freely re-distributable.