1. Launch iTunes, click "Add File to Library," browse to the location of the videos you want to compress, select them and click "Open."
2. Click the library switcher, located directly under the iTunes menu bar, and select "Films."
3. Click "Home Videos" on the left panel This shows a list of all the video files in that category.
4. Select the videos you want to compress. Click "File," select "Convert" and then click "Create iPod or iPhone Version." ITunes will start compressing your videos. If some of the videos do not need to be compressed, you will see a pop-up window informing you of this. Otherwise the compressed video will save to your iTunes Media folder.
If you are unsure where that iTunes Media library folder is simply right-click your converted video and select 'Show in Windows Explorer" to locate it: