Ogg Vorbis is an audio format that is
(1) open source, i.e. the software to encode and decode it is open source
(2) not patent-encumbered.
#2 is particularly important. Phillips has a patent on mp3, which means that legally, every mp3 encoder must pay Philips a small fee. For example, Apple pays for its use of mp3 in iTunes; presumably we make up for it with the prices for Mac hardware, and by buying Jaguar update.
This is a problem for open-source software; if you download a Linux distribution for free, who's going to pay Philips for the mp3 encoding software included? (For this reason, Red Hat and other distributors have been forced to include mp3 software only in a paid boxed edition)
Because of these issues, and because people like to code their own stuff, Ogg Vorbis was invented. It offers somewhat better compression than mp3, or somewhat better quality for a given file size.
You can download an
Ogg Vortbis Quicktime Component that will allow iTunes (and any Quicktime-compliant app) to play ogg files.