How can the iPhone Safari web browser fit an entire webpage on a such a small display?

Apple explains that:

With its advanced Safari browser, iPhone lets you see any web page the way it was designed to be seen, then easily zoom in by simply tapping on the multi-touch display with your finger.

In a more in-depth description, David Pogue writes in the New York Times:

You see the entire Web page on the iPhone's screen. You double-tap any spot to zoom in. Or you use the two-fingered spread-apart gesture to "stretch" the image larger, or pinch your thumb and forefinger on the glass to zoom out again. The manipulation is seamless, smoothly animated -- and useful.

Using Google Maps to get you driving directions and maps, for example, is just light-years simpler and more powerful than on any other machine, thanks to this "rubber Web page" stretching technology.

Does the iPhone Safari web browser support Flash?

On April 29, 2010, Steve Jobs formally posted a blistering "Thoughts on Flash" piece that made it abundantly clear that Apple never would support, or allow others to support, Flash on the iPhone and additional speculation essentially is pointless. Nevertheless this answer, first published on February 1, 2007 and last revised on July 9, 2010 remains for "historical" interest.

The short answer simply is no, just as it has been since the original iPhone shipped on June 29, 2007. Since that time, however, there have been a remarkable number of promises and developments, as well as a third-party "hack" that may be of interest.

On February 1, 2007, EveryiPod.com published:

In an interview with The New York Times, Steve Jobs says "you might see that" referring to Flash support. When asked about YouTube, he answered with:

Yeah, YouTube -- of course. But you don't need to have Flash to show YouTube. All you need to do is deal with YouTube. And plus, we could get 'em to up their video resolution at the same time, by using h.264 instead of the old codec.

In an article in the Chicago Sun-Times, Andy Ihnatko reported that he asked:

If Real and Macromedia et al. would be writing media plug-ins for the iPhone's Web browser, and was told that no, the browser would ship with plug-ins, but Apple would be writing them all in-house. Odd, that.

Odd, indeed. YouTube uses the Flash Video (FLV) format. There are a number of programs other than the Flash Video Player that also support the FLV format.

However, it is not clear if Jobs intends to leverage the Apple partnership with Google to encourage YouTube to change its video format or whether Apple intends to write a browser plug-in that supports FLV, but potentially not the Flash (SWF) format.

On June 20, 2007, Apple announced that the Apple TV and iPhone would support YouTube and it became clear that YouTube was changing it's video format to h.264 rather than supporting FLV.

Onn March 19, 2008, TUAW noted an interview in the WSJ with Adobe's CEO that the company planned to bring Flash support to the iPhone independently by "the summer". The summer of 2008 came and went and Flash still was not available for the iPhone, although Adobe reported that it was working in an iPhone emulator.

On September 30, 2008, Flash Magazine reported that Adobe was still working on Flash for the iPhone but the "ball is in Apple's yard at this time" and on January 30, 2009, Bloomberg followed up with a quote from Adobe's CEO Shantanu Narayen remarking that "the ball is in our court. The onus is on us to deliver."

By the end of 2009, Adobe became a bit more aggressive, making it possible for developers to "change Flash applications into native iPhone applications using Adobe's Flash Professional CS5 developer tool" and directly blaming Apple for restricting "use of technologies required by products like Flash Player".

On January 14, 2010, perhaps the most promising development to date for Flash enthusiasts was unveiled in the form of a clever third-party hack, first spotted by GadgetLab. Dubbed "Gordon", this hack provided webmasters with a Javascript runtime that "allows the [iPhone Safari] browser to play and display .swf files (the Shockwave Flash file extension)". Note that this hack required webmasters to include the runtime with each unique Flash file for it to be accessible on an iPhone.

When last updated on January 19, 2010, EveryiPod.com concluded:

Ultimately, those who want official Flash support on the iPhone likely will have little choice but to continue to wait, but some webmasters may choose to use the "Flash Gordon" hack in the meantime.

Needless to say, after Apple's April 29, 2010 missive, there was no reason to continue to wait and most have moved on. Some have decided that they do not need Flash support on the iPhone and others have switched to Google's Android platform that does support Flash.