Sorry I only use containers and formats from the future. They are secret and can't be talked about but suffice it to say that having seen into the future, I could never go back to such eventually-to-be outdated containers such as .m4v and h.264.
Lol. All containers will *eventually* be outdated (note, h.264 is not a container, its a video codec).
Xbmc has many great features besides the fact it will play most anything (or at least try to). Its another experience. Period. Works for some, not for others.
That said, .m4v is simply a deriviative of the .mp4 extension that tells apple devices to recoginize embedded chapters and AC3 as an optional sound track in an .mp4. In fact it is still muxed as an mp4 (in hb via libmp4v2).
Matroska (mkv) has more going for it as a container in terms of subtitles and allowed codecs (remember h.264 is a codec, not a container), most notably of course is currently .mkv allows for a DTS audio track whereas mp4 does not..
Both are considered 'modern' containers and have great expandability to include various features. Until Apple introduced AC3 Dolby Digital via a 'private track' in their HD iTunes releases in an mp4 there was no such known implementation. This is more by way of example. As such there is nothing technical standing in the way of .mp4 also in the future allowing for a DTS audio track. Though of course these things are always an end to a means. It would require that there is a device that can decode it to make it any more than an interesting excersize.
In the end ... containers will live and die by their adoption amongst users. A container (or codec for that matter) no matter how great will likely die on the vine if it isn't widely adopted. Companies will not adopt it nor will open source devs develop for it in any appreciable way.
Example: .avi became popular only because at one point it was the best container an out of the box windows machine could play ... that was many years ago even though by todays standards the container was massively flawed and never improved or kept up to date (ie. handling variable frame rate, etc.) to work with what we expect out of modern video formats.
That said: to the OP, apple has adopted .mp4 (same as .m4v really) as their main video container, for good or bad. XBMC, besides its other features will allow you to try to play other formats if you do not want to be beholden to the mp4 container (probably most notably .mkv if you are concerned with playing back another 'modern' container which has gotten widespread adoption).
Just my .02.
