The MPEG 1 Layer 3 algorithm is based on a very complicated psycho-acoustic model. This model is based on the capability of eliminating those frequencies which the human ear is unable to hear. MP3 can reach compression rates 1:12 without loosing the CD quality of your original recording.

Midi is a sythesized form of songs, its usually a hit because of its size, much smaller than most sound files, allows you to hear a small version of your favorite songs, has caught on much bigger than most first thought.

Real Player files are usually liked for their size also, but they are streaming which sorta means its going from their computer to yours, which causes some time problems, and has become just a hassle to many long time "surfers", who have settled for Mp3's.