Then Linus responded pretty poorly (and ended up stepping down as CEO and is now a chief creative something or other iirc)
Linus didn’t step down in response to this. I don’t remember the exact timelines, but he either stepped down before this, or was in already in the process of transitioning to the new CEO when this happened.
All video codecs are lossy, meaning you will lose some quality. AV1 and H.265 are modern video codecs with the best quality to bitrate ratios, meaning you can get better quality for the same bitrate, or the same quality with a lower bitrate. The downside the these codecs is that they are very complex and computational expensive to do in software. You’ll want to make sure your GPU supports hardware encoding for the codecs you intend to record with. The reason most people will recommend AV1 over H.265 is that AV1 is royalty free. With H.265, companies have to pay a royalty to use H.265. Because of this, most companies (Netflix, YouTube, Facebook, Twitch, etc.) want to use AV1 going forward, meaning in the near future, it will probably be the dominant codec.