Unfortunately, the official Facebook app doesn’t support watching videos in Facebook format, thus a new application has stepped in to do the job. The new Facebook Video Player application helps you do just that, watch videos uploaded by your friends on your iPhone, iPad or iPod touch.
Open your Facebook profile via this app, and where you see a video link, just tap on it and on top of the screen you’ll see a Play button, now you’re just tap away from watching the video. The star icon on top allows you to favorite any video of your choice for later viewing.
Facebook Video Player is compatible with the iPhone and iPod touch, and most likely iPad as well. You should make sure you have firmware 3.x or above to run it. The iTunes App Store link to download Facebook Video Player.
This video shows it in action: