MPEG-1 is a very old compression standard and its quality has long been surpassed by more modern codecs. However, virtually any computer in use today can play back MPEG-1 files, which still makes it a good choice for web distribution, particularly if your audience is multi-platform (even linux plays MPEG-1s).
The other main use for MPEG-1 is in making VCDs. VCDs can hold about an hour of MPEG-1 video on a CD-R, and can be played back in most modern DVD players. VCD is usually referred to as having quality comparable to VHS, but this statement is a little misleading. "VHS quality" essentially means "crappy quality, but watchable," and while VCD and VHS are indeed both crappy yet watchable, they are crappy in very different ways. VCDs often exhibit noticeable blockiness, which can reach extreme levels in high motion. I recommend you only use VCDs for personal use and not for distribution of materials in an academic or professional setting.
There are many MPEG-1 encoders out there. I recommend you use TMPGEnc, which is free and gives excellent quality. The guidelines on this page will apply to just about any MPEG-1 encoder you choose to use.
Resolution: 320x240 or 352x240. This is where most people go wrong when encoding
MPEG-1. The higher the resolution, the better, right? Wrong, at least with MPEG-1. It
works best with resolutions of 352x240 or less. If you were to take a 720x480 DV file
and create two MPEG-1 versions with the same bitrate, one at its original 720x480 and
the other 352x240, then played both back at full screen on a computer monitor, the
352x240 version would appear better quality, even though it is being scaled up more.
You should use 320x240 resolution when your video will be played back on a computer, since this size will preserve the correct aspect ratio and appear as it would on a TV. If you are making a VCD and intend to watch the video on a TV, then use 352x240.
CBR vs. VBR: Some encoders will give you the choice between constant bitrate (CBR) and variable bitrate (VBR).
CBR is much faster to encode, and since the bitrate is constant you can calculate exactly what the final size of your movie will be. The drawback of CBR is that it is less efficient and may use more bits than is really required to encode your file, resulting in a larger file. CBR is required for VCD.VBR varies the bitrate to allocate more bits to complicated scenes and use as few bits as needed in simple scenes. The bits are much more efficiently use, which usually leads to a smaller file size than a comparable CBR file. The downside is that VBR takes much longer to encode. The best VBR is two-pass VBR. The first pass the encoder goes through the video and calculates how many bits to allocate to each part of the video. No actual encoding is performed during the first pass. The second pass is when the video is actually encoded. For VBR, instead of setting one bitrate, you usually specify a maximum, average, and minimum bitrate.
Bitrate: For web distribution, you can go as low as an average bitrate of 500 kbit/s and still get acceptable looking video. 500-2000 is usually a good range for the web. For personal use or for broadband download you can go much higher. Obviously, since every video is different, you may have to experiment a bit to find the bitrate that looks best. For VCD, the constant bitrate is always locked at 1150 kbit/s.
VBV buffer size: 20 KB.
Aspect ratio: 4:3 display.
Frame rate: 29.97 fps is NTSC standard and will most likely be the frame rate of your source. For VCD, the frame rate must stay at this. For computer playback, you can decrease the frame rate to reduce the file size if you wish, although you should only do this if you do not require smooth video playback. You may reduce the frame rate to 15, 10, 7.5, 6, or 5 fps.