Not true: about half of the videos I've got on my N900 right now are in MKV files.

A few items to note:

1) The MKV, or Matroska, file format is not itself a type of video - it is a container format, which can contain videos of many types. All the video players I've tried so far on the N900 can handle the MKV file format.

2) The N900 is quite capable of playing a decent range of video codecs. If the video you are trying to play is not supported, however, you can fairly easily convert it to a supported codec. The Maemo.org site has a good wiki page on how to do this:

http://wiki.maemo.org/Video_encoding