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From the little I've read, Ogg Vorbis is not compatible with .avi as-is, which is where the OGM container comes in. It appears to be a special format of .avi (or some other video format) that is able to have OGG audio muxed into it, and it supports multiple audio tracks as well (you can put dialog + director's commentary + whatever all in one file and choose which track you want to play, just like a DVD).
Chapters seem to work simply by ripping each chapter individually then wrapping everything into the OGM container.
I guess a fair analogy would be that ogm is similar to .zip where the zip archive contains multiple file types, and some applications can read/execure files directly from the archive.
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