At its heart, Wii Transfer is about making it easier to move movies, music, and pictures to your Wii.
Wii Transfer converts the QuickTime movie file to the appropriate format. Streaming a movie plays it directly from your Mac over the local network, in the same way that sharing music and pictures works.
The Preferences window in Wii Transfer has a quality setting for converting movie files. You can also adjust the cache size for streaming movies, or manually delete movies from the cache by pressing the delete key while a movie is selected in the Movies pane.
Learn more: Streaming Movies with Flash Video, Finding Movies, Supported File Formats.