The above command creates relatively good video with small footprints

Container
The preferred file (container) format is MP4 (suffix .mp4, or .m4a for audio only). QuickTime format (suffix .mov) is also acceptable.
Fast Start
Files should have the appropriate header for progressive download ("Fast Start" and "Compressed Header" in QuickTime? Pro export -- "Fast Start" means that the movie header "moov" is stored in the first atom of a single fork file, this header is followed by the "mdat" interleaved video and audio data as temporal order chunks; this is necessary for progressive download but "Compressed Header" is not, though it reduces the size of the download).
RTSP
We are not implementing true streaming (RTP/RTSP) at this time, so do not create a hint track ("Prepare for Internet Streaming").
Video Codec
The preferred video codec is MPEG-4 part 2 (Simple Profile). Sorenson Video 3 (Basic or Pro) is also acceptable. Recommended settings are:

size 320x240 (assuming 4:3 aspect ratio source material; though keep in mind that video aspect ratio is black magick in part because digital computer displays have differently shaped pixels than analog televisions)

Frame Rate
15 fps (assuming 30fps source material such as NTSC; for PAL 25fps, use 12.5fps; for cinema 24fps use 12fps. For slowly changing NTSC, you can go down to 10fps.)
Key Frame
key frame every 10 seconds (150 frames) (You can set this even higher in codecs such as Sorensen Video 3, such as once a minute, since those codecs will automatically insert key frames anyway when the amount of motion indicates it. The reason for every 10 seconds is that it makes it easer for player scanning.)
Bitrate
average bit rate at most 50kbytes/sec (400kbit/sec) (The overall file data rate will be higher because of the audio track(s). You may not need this much to achieve the quality you want. Note that you should generally not set an explicit maximum bit rate but instead code by quality. For example in QuickTime? Pro, setting "Limit data rate" seems to determine a mandatory (not maximum) data rate, which may result in a constant or unnecessarily high data rate. Instead you should uncheck this setting and code by Quality -- start with "Medium" or "60"; other encoders may offer a total target file size. Use two-pass VBR if your encoder is capable of it. A maximum bit rate applied at each frame, vs. for the whole file, is more relevant for streaming.)
Audio
The preferred audio codec is AAC Low Complexity ("MPEG-4 audio"). Recommended settings are:
64kbit/sec mono for speech 128kbit/sec stereo for music (assuming stereo source).
File Size
A simple rule - of - thumb, however, is that for standard iPod encoded content (1.5mbps) you'll be looking at approximately 500MB per hour of video content. Apple TV )content at 3 mbps will naturally be twice that size (1GB per hour