avi are what you capture files at, so they are in fact not compressed files. Though you can still compress them so they still remain avi. But they fall under divx, xvid. Also the program being used to compression the avi into a final file, will have it's own codex and compression.
Programs like adobe Premiere have many file compression codex types and too many to mention.. All you need to know is about an avi is. When you compress it you loose quality so similar colours become blocky and movement also looks Blocky... divx is indeed one of the better compression but you can still over compression so it too will look bad.
Also remember, when people compress files they neglect not too many people can watch them and that's why we all have too many video players to watch these WMV. AVI, MOV.RM, VOB. It's endless and a bit of a joke for myself, whose into video and worse still for your self.
So first make sure you can play the file back, I have a divx player, a cyberling DVD, a FLV player, windows media player and a quicktime player. Because these stupid compression formats and peoples total ignorance as in how to use them make it a daily choir looking for drivers just so the rest of us can view them.
Sorry if I sound a d##k, but i have a pet hate with all these codex, players and video types and not one of my players plays them all.
wmv seems to play on everything, so if you can drag your avi into windows movie maker. You'll find in there you can set the size of the file. so experiment with what you think looks good and is not too big a file for your needs..