A Video Encoder, also called a Video Transcoder, converts a given video source from one format to another. Every video file, be it a live broadcast, youtube video, embedded videos on a webpage or in a social media application have been transcoded at one point or another. Every video format has it's own set of specifications, including video codec (h.264, h.265, hevc, ProRes, DNx), audio codec (aac, mp3, wav) and wrapper such as MP4, MXF, MOV, AVI and so on.
Not all formats are compatible with all viewing platforms and that is where transcoders come in. If a video does not meet a required specification, or if the video's current format is not the same as the intended finished project, then it must be converted into the right format using a transcoder. With a proper transcoding solution you can take in footage from nearly any source, and create a matching product for the intended viewing platform.
One of the critical factors in transcoding is to always start with the highest possible quality source. Different cameras record in different video formats, some support recording directly to codecs suited for playout on mobile devices or within a web browser, while some record in completely proprietary formats developed by the manufacturer to produce the highest quality videos with the most color depth.
When you compress, downres, or lower the data rate of a video file there is a loss of some amount of video data in the finished file. This can be a loss in color depth, framerate, resolution, and so on. Once you have transcoded a file to a compressed low-grade version you cannot transcode that reduced version back to it's original quality. In short if a video must meet precise specifications, then the video must be encoded to the proper format, using a video encoder.