The popular Flash-based JW Player from Longtail has support for referencing multiple files of the same video, and selects the best one to use based on the user's connection and viewing size, giving the optimal viewing experience. This is known as Bitrate Switching, or sometimes referred to as Dynamic Streaming. For instance, a viewer with a lot of bandwidth who only views at a small resolution does not need the highest resolution file (that would be a waste of bandwidth, since a video quality improvement would not be discernable to the human eye). Similarly, when viewing in full-screen, if there is bandwidth to support using the high quality version, the player will use it, but if the user doesn't have the necessary bandwidth the player will automatically step down to the next file that the user's connection will support. Be sure to check out our Video Comparison page and turn on the "Show Quality Info" checkbox to see this technology live in action.
To demonstrate how the player does all of this, we created the video below from an Internet connection which was constantly giving inconsistent banwidth, located on a public shared WiFi network.