Let me describe it as follows. There are several different file formats for video files (sometimes also called “wrappers”). There are also several different codecs that can be used to encode (or compress) audio and video. Audio and video use different codecs - and encoded formats can be recorded in different types of files / formats.
So, when you talk about “coding” and “converting,” a couple of things come into play.
"Encoding" will be the act of receiving audio / video and encoding them into a given codec (s). "Transformation" implies the availability of material in one format, but its desire in another. There are two ways to look at this:
Often called "repackaging" - this is when the video (for example) was encoded correctly (for example, h264 with a set of parameters), but you want it in another file - maybe it's .AVI, and you wanted it in .MP4. This is not due to a change in the actual video - just drag and drop the h264 stream into a new “wrapper” and thus is a quick operation.
Re-coding. Say your sound was in MP3 format, and you wanted it in AAC format. To do this, you need to decode the entire MP3 stream and transcode it to AAC.
Obviously, you can also do "1" and "2" together.
Contact Formats and Codecs for details.
Hope this helps!