My hosting company is now offering MariaDB as an alternative to MySQL. Does anybody know if EE is compatible with MariaDB and if it offers any performance benefits?
I use MariaDB on my home development environment and I love it. MariaDB is completely compatible; it's a fork of the MySQL project by the original creator of MySQL, in fact. (He left the company when it got bought by Sun some years back.) There should be zero issues
As to performance: you will probably see performance gains. It's always hard to say, with databases, without knowing about your specific application usage/traffic patterns/etc. However, MariaDB has made some significant improvements to the query plan optimizer, and the table storage engines are also significantly better in some ways.
As to table storage engines: I recommend using the ARIA engine if you've also got MariaDB running on your local dev environment; it is a good storage engine. If you do not have MariaDB running on all your servers, though, use XtraDB (the InnoDB replacement); exporting ARIA tables could cause headaches on import if you're not importing them to another MariaDB installation. (This is not a problem specific to MariaDB -- it would happen on any MySQL or clone installation that doesn't have the corresponding storage engine installed.)
MariaDB (and Percona MySQL) are drop-in replacements for MySQL, so it's 100% compatible. I would definitely switch to MariaDB, it has huge performance gains. We personally use it (Percona that is, but they are essentially the same thing) on our website (which runs EECMS) and exclusively use Percona MySQL on our hosting servers.