H.265, also called HEVC, is H.264's successor, standardised in 2013. Published comparisons put it at around half the bitrate of H.264 for the same perceived quality; Apple's own guidance for its Compressor workflow claims files up to 40% smaller. Which figure you get depends heavily on content and encoder settings, and the honest summary is "meaningfully smaller, not a fixed percentage".
The reasons not to use it are not technical:
- Playback support is good but not universal. Modern Apple devices, recent Android, Edge and Safari handle it. Chrome and Firefox on desktop have a long and inconsistent history with it, which matters if the file will be played in a browser.
- Its patent licensing is famously fragmented, which is why the web largely routed around it to VP9 and then AV1 rather than adopting it.
- Encoding is slower than H.264 at comparable settings, sometimes by several times.
Where it is clearly the right answer: large source files that stay in your own ecosystem, 4K material where the saving is largest in absolute terms, and archival copies you will re-encode from later.
Where it is the wrong answer: anything being sent to someone whose device you do not know, and anything going to a platform that will re-encode it anyway — you pay the compatibility risk and the platform throws away the benefit.