Optimising video for itunes and appletv - Help please!

I'm trying to understand the how itunes handles video and how it is optimised for different devices.
If i've attached my iphone and itunes syncs over a video, does it automatically optimise the version being sync on the the iphone.
I've noticed there are two options when converting a video, convert for ipod and convert for appletv.
Is there any difference between the two?
Also. I seem to remember a statement form apple saying that any movies/videos purchased or rented over appletv would be a higher quality than those bought on a mac or iphone/ipodtouch. Is this true.
Really i'm looking to understand how video works between a mac, apple tv and a iphone/ipodtouch and does it make any difference to the quality of the video which source i buy it from?
Thanks

HI Matthew,
I don't have the answer to your question directly but MacWorld has great information on just what you are searching for: http://www.macworld.com/ I have a subscription to the magazine and read it front and back and they always have information on just what you are trying to find. There's blogs on their site too. http://www.macworld.com/
The video would be QuickTime format, iPod would be MP3. Go here for info:
http://support.apple.com/kb/HT1532
Carolyn

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