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.

Apple also provides a video demonstration on the company website that may be of interest.

Does the iPhone Safari web browser support Flash?

The short answer simply is "no." 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, the TUAW blog noted an interview in the WSJ with Adobe's CEO where the company plans to bring Flash support to the iPhone independently by "the summer". Well, the summer of 2008 came and went and Flash still was not available for the iPhone.

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."

No matter which "yard or court the ball is in" with regards to Flash development for the iPhone, it certainly appears that it isn't being treated as a high priority. It has not been mentioned by Apple as a forthcoming addition to version 3 of the iPhone OS either. Those who want Flash support on the iPhone likely will have little choice but to continue to wait.