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There are a lot of threads on MobileRead dealing with the various Kindle formats and the pros and cons of using them. Here is a brief summary:
MOBI - Old Kindle format with limited text formatting. MOBI may also refer to a file that combines the old MOBI format with the newer KF8 in a single file. Either variant can be emailed to a Kindle via your Amazon account. Emailing the combined format will result in AZW3 (KF8) being delivered to your Kindle.
AZW3 (KF8) - Format with features equivalent to EPUB 2. Must be sideloaded via USB, not emailed.
KFX - The format delivered to your Kindle for most books purchased from Amazon. Supports "Enhanced Typesetting" for better readability.
There are other issues, such as whether a book is marked as a Book (EBOK) or Personal Document (PDOC), whether or not a cover image thumbnail is available, and syncing reading position and notes between multiple reading devices/apps.
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