AMZ is just Amazons own DRM protected format, and as someone who is usually
pro-opensource it took some while to get used too. On the kindle it is perfect
and the file sizes are usually not large, on Amazon it lists the file size with
the ebooks, but I do not think there is much in the difference. Using Calibre I
can convert to epub and yes the kindle does handle them, as far as I know it can
handle most formats it is just the PDF issue. You can just send a PDF to the
kindle, but then you have to zoom in and scroll around to read the text, not the
best option. Any free ebook I have downloaded (From Amazon or elsewhere) has
displayed fine. I usually convert to epub or use that on the Kindle (other then
the bought stuff).