Neillithan,
Just as CoreAVC does, the DivX H.264 Decoder also decodes more than just High 4.0 content. Hardware is a different story though.
The comments Dark Shikari and neuron2 make are correct. Supporting higher levels does introduce a much greater burden on manufacturers in terms of devices capabilities and cost. Widespread support of everything up to level 5.1 is infeasible. Look back to my earlier post where I'm speaking to interoperability across many manufacturers, confidence amongst consumers and content creators and low-cost solutions in many device categories. Think to yourself, "How do we get there from here?". You said it yourself,
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When I went looking for a media server capable of playing H.264 .mkv files, I found Popcorn hour. When I took a closer look, I realized it only played Level 4.1 (I believe) .mkv files. That's the problem with the world of HD right now. There are so many blu ray players and media extenders boasting playback of H.264, but the truth is, they don't play everything.
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If you're not very technically informed devices either play H.264 or they don't. But the world of H.264 is diverse, and earlier I used some of Apple's devices as just one example of a lineup from a single manufacturer where if it was not for Apple's somewhat closed content ecosystem consumers might be mystified as to why files from one device don't play on another.
DivX wants to build a consistent platform. We want to bring all manner of capable devices into an ecosystem where creators and viewers don't have to target specific devices but only a known profile that we can assure will work reliably everywhere. And that's bigger than just H.264. It's the container. It's the audio format. It's the subtitles and the metadata and all other aspects of the experience.
I don't know about you, but I don't want to re-encode my media for every single device I ever buy. I don't want my friends to have to either. I know some of my friends wouldn't know where to start in fact. I don't want my PC trying to transcode all my videos on the fly for my connected device every time I watch them because a year ago I decided I could get an extra 0.5% compression by using an extra b-frame. I want my media to look fantastic, sound amazing, and play the instant I want to watch it with no fuss.
On the other hand, nobody is taking away your freedom to encode your files the way you like. If these values are less important to you then that too is okay. But wouldn't it be nice if you ever shared your files with others that
they could enjoy the great experience that a common platform offered?
I really have not found anything that doesn't look spectacular in 1080 using level 4.0.