I am new to Kindle development and I wonder if there are code level differences between Amazon's AZW format and Mobipocket MOBI format.
As far as I understand, AZW is simply DRM added version of Mobipocket format, but is it entirely true? If possible, could you provide an answer in terms of technical specifications or code examples? And is AZW the only way to apply some kind of a protection scheme over Mobipocket format?
The reason why I am asking this question is to see if there is any specific reason why I should pick AZW over MOBI.
And one additional question: Is AZW a proprietary format or can I use it freely?
Your understanding is correct. AZW is MOBI with DRM. The Amazon Kindle file formats Wikipedia page has extensive explanations and references on the tech specs.
The only reason to pick up AZW over MOBI is for DRM. However, if you're talking about AZW3 then there are heaps of other reasons, the 2 most compelling ones being CSS and HTML5 support - more details on this amazon press release