The h264 file extension identifies video data encoded withH.264/MPEG-4 AVC codec. However, it is not the main file suffix for H264 video, and M4A, MP4, MKV, FLV are much more common etc. Regardless, many programs will recognize the format.
If you transcode H.264 video to AVI you also decrease a video quality, because AVI container is not able to store video data in HD quality. You can use various codecs for video stored in AVI, like DivX, XviD etc.