LEMMING There's nothing amiss here. It's perfectly clear. It says "VideoDrive makes it easy to add videos to iTunes without converting them or losing quality." No conversion is necessary when adding to iTunes for viewing in iTunes or Front Row. VideoDrive easily adds AVI, MP4, and MKV files without converting them.
However, if you wish to add non-compatible movie files (AVI, MKV) to your iPod, iPhone, or AppleTV, then of course they'll have to be converted because those devices only support MP4, MOV (not all), and M4V.
The difference is between iTunes (an app) and Apple devices (iPod, iPhone and AppleTV). VideoDrive allows iTunes to play MKVs and AVIs without conversion. The same Quicktime trick won't work with iPods, iPhones, and AppleTVs; hence the need for conversion if that's the type of movie file you have.
(Version 1.4.1)