Uploading / playing videos directly- is it possible?

I understand that one can play a video from youtube via the embed option. However, I have a number of short, instructional videos that I would much rather host and play directly on the site. Is there any way to do this?

When editing content on a basic page, there seems to be an option to include flash content. However, when you try to upload a flv video file it uploads a file that seems to be the right size, but has dimensions of 0 by 0. I've tried inserting this file into the page, but it will not play (shows up as a black box), unsurprisingly. Other video formats will not upload. I've played with all the settings I can find, but nothing seems to work.

Is this functionality that is missing from MIT's Drupal cloud? If so, can we have a video module distributed? If not, what should I be doing differently?

thanks!