You can install the ATVFlash software at Firecore.com - easy to install, works great, allows you to watch MKV, AVi, MP4, etc through your apple TV. it's $29.95 and currently for the Apple TV 2nd Gen (3rd gen in the works).
The other option is to Jailbreak your Apple TV (only available for 1st and 2nd Gen at the moment - 3rd in the pipeline) and install XBMC.
Hope this helps