You can import videos into iTunes, it just takes a little extra work. Unfortunately, you cannot just drop files that you have download from the Internet or uploaded from a camera into iTunes. Most videos found online or that come from video cameras are in the .avi, .mpg or .wmv format, you should converter the video into the format which iPod supported.
Converting Video
To get video into the proper format, you'll need to convert it with converter software. There so many free video file format conversion tools online.
You can also use other video converters, just like Cucusoft iPod Movie/Video Converter, it support almost all video file including DivX, XviD, MOV, dvr-ms, rm, rmvb, MPEG, WMV, AVI ... to iPod video (MP4 format), and also support various iPod video size including H.264 video: up to 768 Kbps, 320 x 240, 30 frames per sec., Baseline Profile up to Level 1.3 with AAC-LC up to 160 Kbps, 48 KHz, stereo audio in .m4v, .mp4 and .mov file formats; MPEG-4 video: up to 2.5 mbps, 480 x 480, 30 frames per sec., Simple Profile with AAC-LC up to 160 Kbps, 48 KHz, stereo audio in .m4v, .mp4 and .mov file formats.
Video Conversion Tips
1. Have plenty of hard drive space.
Video must be decompressed before it can be converted. Uncompressed video chews up gigabytes (GB) of drive space, which can cause slow performance or system crashes if you don't have enough memory.
2. Set your resolution.
The best resolution for iPod videos is 640x480 at 1.5Mbps for .MOV files and 640x480 at 2.5Mbps for MP4 files.
3. Smaller files mean less resolution.
If you want the highest quality video, you're going to be dealing with very large files. The more you compress the video, the more information is lost. If you're trying to create small files, you'll need to experiment with different settings to retain as much of the original video quality as possible. Too much compression will wash out colors, pixellate the images (making them appear blocky) and reduce the frame rate (which makes motion jerky).
Simple guide for importing video into iTunes
Step 1. Add video to library: File > Add to Library or File > Import
Step 2. convert video for iPod: Right click on it and select "Convert Selection for iPod / iPhone" or select the video then navigate menus Advanced > "Convert Selection for iPod / iPhone", this should make a copy of the video in your library of an iPod compatible format.
Step 3. Veryify that you syncronize videos with your iPod. With iPod connected, navigate to settings and enable video synchronization.
Step 4. Connect and sync your iPod.
Related resources: How to free share itune videos and music between two computer for free?