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The code makes it possible for any open source project to add support for the video codec without paying any fee or signing any restrictive license with the MPEG-LA, the industry group that licenses the technology.
This is a major development, as the situation around the proprietary codec has been an important source of contention among browser makers to date.
Most video found online is encoded with H.264. That's not a problem for Flash video, since Flash Player supports the codec out of the box.
In theory, it's not a problem for HTML5 video either, as long as browsers agree to license the codec. In fact, the license is even free in many cases. But it is incompatible with open source projects like Firefox.
Mozilla refused to add support for H.264, though it could have afforded to pay the license, because it meant that downstream projects, which relied on Firefox, wouldn't have been able to get the entire Firefox source code under an open license.
Google came up with a potential solution, the WebM video format and the VP8 codec, which it open sourced and made available for free. But, several years after that, most videos found online are still encoded with H.264 and won't work in Firefox without external codecs.
Mozilla had actually given up the fight, since it was going at it alone after Google promised support but never delivered it.
But with Cisco releasing the full source code of its implementation of H.264 under an open license, as well as making available the compiled binaries from that source code also for free, it becomes possible for Mozilla and everyone else to add support for H.264 without any restrictions.
