HD is a frame size, 1280×720 or 1920×1080, you can post/view the 720 favor on the web, it does take a fast server/connection to stream 720 content. If you look at movie trailers you will find a lot of them are even 1080.
Quality depends on how well you shoot, edit and color correct. Well shot SD will look better on the web then poorly shot HD.
For H.264 is the codec of choice for most video for the web.
Take a look at what is on the web, download them, look at their size, bitrates and codec in QT Player, try to do the same, using Compressor or buying higher end encoders if you need higher quality. But once again, your footage has to be high quality to start with if you want high quality on the web. And yes quality always goes down as you enter into highly compressed codecs for the web but the game is to get the best quality possible (not the same quality as the original) at the smallest size and lowest bitrate required.