It sounds like you need a little further explanation than just what MO3 is:
What is a MOD(Module)?
Excerpt from digital magic:
A mod is a music file format for which can be played by computers with a soundblaster or sound blaster compatible sound card. It contains several different samples, or instruments, as well as a set of binary instructions (sort of like a program written by the composer) that tell the computer when to play each one, and at what pitch. This allows someone to take many different sounds and compose a song out of them.
In simpler terms this mean a mod is made up of a number of sounds reffered to as "samples", and a list of instructions on when to play them. (referred to as a "pattern")
Each sample is either "RAW" or in today's MOD's "wave"'s. As a result the MOD can get very large as wav are about as big as you can get.
MO3, simply put is a tool for compressing the "pattern", and intead of waves compressing the "samples" as mp3 or ogg vorbis.
The uses of this in making a 30 Mb MOD file much smaller, its just in the same way as making an mp3 from a song on an audio cd, "to save space while retaining quality".
Here is an example of a MOD:http://home.iprimus.com.au/seanhindley/Shiftless - Deeper Into The Sun.IT
And an example of the same MOD as a MO3:http://home.iprimus.com.au/seanhindley/Shiftless - Deeper Into The Sun.mo3
Note: you may need to right-click and select "save as" to download the Mod's posted above.
And here is a link for XMPlay (no JS required):http://home.iprimus.com.au/seanhindley/xmplay24.zip
MOD are created using "Trackers" for further information regarding "trackers" and "mods" check out:http://www.linuxjournal.com/article.php?sid=4349
There isn't a mo3 plugin for winamp at current though it would be fairly simple for the current bass plugin to support it (I think)
No portable players support this format, in fact none support MOD either to my knowledge.
And the level of compression is entirely up to you, the same quality to size ratio that exists with mp3, ogg, and every other lossy compression format on the planet.