Modern video compression is so amazing efficient that it always blasts my head how a short movie is only slightly larger then a JPEG still frame. I don't know any other lossy file compression which is similarly amazing.
It really was the only way to get a balance of decent video quality with a reasonable (usually 700MB or less, for CD-video purposes) file size.
My computer was too weak to really play back said DivX files at the time (‘02? ‘03?) - so I would burn them and play them through my Dreamcast with a TV tuner card attached to my computer tower. (I didn’t have a TV of my own, but I had a computer monitor!)
The only other alternatives I knew of at the time were QuickTime (which got big fast when it was longer) and AVI, which; AFAIK, didn’t even use compression and was thusly huge.
It’s not a wonder that DivX is gone now; but for a while, it was just insanely prevelant.
Unfortunately because the codec and format were all sort of hacked together there were lots of different combinations of various DivX, MS-MPEG-4, Windows Audio, and MP3 combinations floating around. In addition people would encode movies with all kinds of different settings trying to eek out a few extra minutes of video on a 700MB CD-R.
DivX tried to advertise itself as "the MP3 of video". It was really the clusterfuck of video that only worked because everyone just installed codec packs (K-lite or ffdshow) and hoped for the best.