http://en.wikipedia.org/wiki/Matroska
Its a container not so much a format. It may contain any number of differently formatted multimedia sources. Anything from h.264, wmv and mpeg for video and anything from MP3, AC3 and FLAC for audio. See the chart at the bottom of the wikipedia article for more formats.
I personally use VLC (
http://www.videolan.org) to play all my video files and it handles .mkv nicely.