So I could transcode my files to an external drive (mech. or ssd) and then use the usb on the NAS to copy it to the NAS?
It really depends on what formats your files are in (or how you add new ones in), how they are being served up (NAS, media shares, itunes, etc) and how you are going to watch them (portable device, Apple TV, Xbox, PS3, Roku, UPnP built into TV or BluRay player, Windows Media Center, etc.).
If you're downloading torrents of MKV files (which is a popular format) some of the players I just mentioned can play MKV files, some can't. One option is to re-encode the file you started with into a different format .mp4, .mov, etc (using handbrake or similar program). Or. . .some media servers can do magic transcoding on the fly while you play something.
Here's a screenshot of me watching an .MKV file (Workaholics) on my MacBook that DSvideo on my Synology sends via Chrome. . .it looks awesome and I can even direct it (from the browser, or my phone, to go to an Apple TV as well). So the Synology is doing the brunt of the work, pushing the files through
I can tell transcoding is going on because the Synology CPU meter is pegged at 100%.
I also have some .mp4 files on my NAS, here's me watching a movie but using VLC on my MacBook, no transcoding necessary, the files are of similar quality at stream about 700kb/S (which is good but probably on the low end of the spectrum for Netflix streams [which I've measured up to 3-4MB/s+]) and I left the Synology CPU meter in frame so you can see it's not doing any work here, just moving a file over.
So yes, many NASes can do some kind of transcoding, but if that matters to you or not depends on what sources your files are and how you plan on watching them. If I wanted to watch MKVs on my phone I would either need to watch them through something that could transcode on the fly (like the Synology DSvideo app) or re-encode them into a different format altogether.
Most people just settle on a format or two that works for them and their specific eco-system of players, portable devices, and server setup (eventually I want to get a spare Mac just to serve up stuff to things in my Mac ecosystem that unfortunately don't share too well when stored on NAS anymore [at least videos don't]), so everyone is different. . .
When I first mentioned SSDs and ripping/encoding files, I meant like once you figure out your system and how you want to store things, oftentimes that means you now want to rip all your DVDs or convert all the stuff you have that's in one format to another format so that your setup can most easily use, play, and distribute it. Ripping or reencoding on a machine with an SSD is a drastically faster process than with a spinning drive, but if you don't have much stuff to rip or have a spare machine you can queue up a bunch of things and don't mind if it takes awhile, it doesn't make a big difference. Personally that's how I do it, then I transfer those files over to the NAS where they sit to be used (txfring just takes minutes over gigabit).
Media servers like Plex (runs on lots of stuff), XBMC, or even Synology's DSvideo do cool things like organize your movies and videos, get metadata and album art for them. . .they also occasionally make some really weird mistakes like thinking UK Top Gear is a porno show.
And lastly, if your main method of aquiring movies is torrents, I would advise you look elsewhere like "Backing up" your DVDs/Blurays, or there's also other,
older places on the net, that still one might be able to find movies, but "I know a guy" who got a in a pinch with his ISP once over the whole torrent thing.
That said, the Download Station on the Synology is not just an amazing Torrent station, it can download legitimate stuff as well, I love it for that. . .and not tying up a PC doing it.
HTH and wasn't too much info overload!
PS - moving files via USB drive or flashdrive would not be a particularly fast process. . .hardwired gigabit connection can get you 60-80MB/s no problem through a newer router/switch to and from the NAS (and that's just my 212+).