The interesting thing about H.264 is that it achieves excellent compression rates not by a single "miracle trick", but by combining multiple small-gain techniques. Every technique lets you gain on the order of 1-3%, but when you combine them all, you get fantastic results.

Another tidbit of (potentially) interesting information: it took many years for H.264 to achieve its full potential, for two reasons:

1) Implementing a decoder is really, really complicated, especially if you want it to run fast, and if you think a miracle "hardware decoder" solves the problem, you need to remember that H.264 places heavy requirements on memory bandwidth and caching (B frames), so it's not like you can just feed a stream through a chip and get video frames on the other side.

2) Implementing an encoder is really, really complicated :-) — and there are many ways to encode a video stream. H.264 delivers the tools, but does not specify how you should use them. It took many years for decoders to get to a state where most of H.264 is used efficiently.