Well, mostly, they don't - they use the .flv file type instead. This article explains the difference between the .fla and .flv filetype:
Again, it is usually converted to .flv, and it is done with software. You can do similar here on DreamHost using the tools described at http://media.dreamhost.com
I would think there would be (Google should help you out with that), though an excellent video player is provided, and licensed for personal and commercial use, here on DreamHost (see the above link to the DreamHost Media page).