How can I reduce the file size rendered by After Effects?

When I render a relatively simple 5 second project in After Effects, the file size of the resultant .avi is 64MB.  If I change the properties to reduce the file size, the degradation makes the file unusable.  What am I doing wrong?

Is AE's encoder really that inefficient? 
The thing is, AVI doesn't mean much.
It's pretty much an empty container box, which doesn't imply a quality level.
So, AME could default to something completely different as a starting point to produce an AVI file.
AE defaults to uncompressed video when you pick AVI as a format. So, obviously this produces huge file sizes. There could be similar quality thresholds with smaller sizes if you pick other AVIcodecs, but that's a different subject. And in any case, when you're rendering a production quality master,  file size is usually not your main concern. You typically use this high quality video file as a source for compressed flavors for distribution. So, pristine video files with huge sizes are a good thing - people then wonder why trailers at apple.com, for instance look so good. And the thing is, the most compressed formats benefit enormously from having an uncompressed file as a source.
Regarding encoding efficiency, yes, AE is less efficient than dedicated encoding solutions. Above all, because it doesn't support 2 pass encoding. Note that for some formats, 2 pass makes a night and day difference, while for others, nothing as drastic as most users seem to believe.
All of this is a moot point for AVI, because the default AVI codecs don't offer these encoding options, which are more the realm of distribution formats like FLV, MPEG-4/H264 or WMV.
There are distribution codecs which use AVI as a container out there, but those are a different case.

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