MKV is the format that hoards: video, a dozen audio tracks and every subtitle, all in one box. It was born in 2002, the open-source Matroska project, and its real weak spot is playing on TVs, iPhones and editors that never learned to open the box.
AAC is MP3's better-trained successor: cleaner sound from the same number of bits. Advanced Audio Coding: the default soundtrack of YouTube, iTunes and most MP4 video. That makes it the right destination when what you need is streaming-grade sound at friendly file sizes.