Yes, the iPod will play .mp4 and .mp3. .mp4 files are iTunes songs as you originally downloaded them, and .mp3 files are either converted files that you converted in iTunes or files that you did not get through iTunes.
The iPod supports a variety of audio formats: AAC, Protected AAC (from iTunes Store), HE-AAC, MP3, Audible, Apple Lossless, AIFF (as found on CDs), and WAV.
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