AVCHD is an effective file format for camcorders and digital cameras with HD recording capability. AVCHD Lite is the same format but it can only manage a resolution of 720p.
While a great advantage of the AVCHD format is smaller files on your hard drive, a disadvantage is that it can be hard to find software that can playback your files. Here is a list of software capable of play movie files in AVCHD and AVCHD Lite file format:
Playback AVCHD/AVCHD Lite files
VLC player is a very popular free media player, known to play most film formats. It can play AVCHD files but at least for AVCHD files, the playback is not fault free (version 1.0.3 and earlier) and you can clearly see artifacts in the movie clips. So there are better options.
Media Player Classic Home Cinema is another free media player. It is a great option for playback of AVCHD and AVCHD Lite files. The install file is also small and the software makes a small footprint on your computer. Editors choice!
Splash Lite is a good alternative to Media Player Classic Home Cinema. It playbacks AVCHD and AVCHD Lite files just as good as Media Player Classic, has a more modern appearance but a larger install file and bigger footprint on your computer.
Note: AVCHD and AVCHD Lite is quite demanding on your computer and if it is too slow, you won’t be able to playback AVCHD or AVCHD Lite smoothly no matter what software you’ve got.
Also worth noting. If you have a Sony PS3 it is also capable of playing your AVCHD files since Sony and Panasonic are the creators of the file format.
Edit: In Windows 7, both Media Player and Windows Media Center is now able to play AVCHD files.