eBooks are currently going through an awkward adolescence with a variety of different formats in use, similar to the old VHS/Beta period. Ideally, all platforms would follow the open standards from the IDPF – International Digital Publishing Form – which has recently published the ePub3 standard. Alas, Amazon Kindle and Apple have their own way of handling things, and few eBook readers can currently handle the full ePub3 specifications. Here’s an overview of the most common formats.

ePub
Free, open ebook standard from IDPF – International Digital Publishing Forum.
Designed for reflowable content (adjusting font size and other settings)  but also supports fixed-layout content.
Replaced Open eBook standard in 2007.
Uses XML for the document manifest, table of contents and meta data.
Uses a ZIP file as a container.
Uses .epub extension (unless it is DRM protected)

ePub2
Approved in 2007. Based on a subset of XHTML 1.1 and CSS2.
The most common ePub format at present, due to the lack of readers supporting ePub3.
Uses .epub extension (unless it is DRM protected)

ePub3
Approved in 2011. Based on HTML5 and CSS2.1 with modules from CSS3.
It includes SVG, CSS and text/audio synchronisation.
Includes MathML for technical publications.
Caters for external links but is weak on annotations.
Has multi-language capabilities.
Also has a fixed layout option well-suited to children’s books.
Uses .epub extension (unless it is DRM protected)

AZW / KF8
Amazon Kindle Format.
AZW is the older Kindle format.
KF8 is the new format for Kindle Fire readers since 2011.
Supports a subset of HTML5 and CSS3 with additional non-standard features.
Uses a container than can also store a Mobi document.
Has a built-in fixed layout well-suited to children’s books.
There are Kindle Apps for Android, MacOS and iOS devices making the books available on multiple devices.
Does not follow the ePub standard completely.

iBook
Created with free iBooks Author software from Apple. Can only be read inside the iBooks ecosystem from Apple.
Uses the .ibooks extension.
Based on ePub, but uses different tags making it incompatible with the ePub standard.
Can only be sold through Apple iBooks store.
The software can also export as plain text and PDF.

PDF
Handled by Adobe Reader, Foxit Reader, XPDF and more. However usually scales content for A4 which is hard to read on tablets/phones.

ODF
Open Document Format.
XML-based format used by Open Office, an open source alternative to MS Office.

Mobi
Format for MobiPocket Reader. Based on HTML 3.2

Formats can also be protected by a digital rights management (DRM) wrapper, an anti-piracy device to protect authors.