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handbrake settings

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Unibody MBP 15"
Im using handbrake and Im not sure what settings to use.

Hard drive space isnt an issue really, as long as its not the same size as the video_ts file im happy.

Quality is my main focus so here's what im thinking:

container: mp4
codec: x264
constant quality: 70%
keep aspect ratio: on
-------------------------

Ive done some research but all the different containers and codecs are somewhat confusing. Why use mkv over mp4 or avi? Why use h.264/x264? over mpeg4 (ffmpeg)? And what containers support which codecs/encoders. Can anyone help me out with understanding all this?
 

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