Captivate has two different ways for screen recording:
The older way is using Software simulation, which has three default modes; Demo (passive viewing), Training (interactive, learner has to do some actions) and Assessment (like training but scoring included and less tips). That way of screen capture is slide-based. It has its advantages and disadvantages.
Video Demo recording will only lead to mp4 (passive video) output. The resulting mp4 has globally a better quality. It has a dedicated editor which allows lot more non-destructive editing after recording. You can convert it to an interactive video by inserting such a slide in a normal Captivate project. Interactive video means that the video pauses at some frames to show more information (static) and/or to include Knowledge Check slides.