MEncoder can handle input streams in two ways: encode or copy them. This section is about copying.
Video stream (option -ovc copy): nice stuff can be done :) Like, putting (not converting!) FLI or VIVO or MPEG-1 video into an AVI file! Of course only MPlayer can play such files :) And it probably has no real life value at all. Rationally: video stream copying can be useful for example when only the audio stream has to be encoded (like, uncompressed PCM to MP3).
Audio stream (option -oac copy): straightforward. It is possible to take an external audio file (MP3, WAV) and mux it into the output stream. Use the -audiofile filename option for this.