From my understanding
It converts the file into flv format to be played flash enabled browsers
Also saves 2 versions (high and low) mp4 formats of the files as well
Issue is with the embedding code
Embedded code only refers to flv format and starts flash web player
I am currently working on the same issue and trying to build an embedded script that has both flv and html5 tags so it can serve up both files
hold tight if i get it to work i will post that here