Step 2 : Overview

An animated GIF file is simply a series of GIF files combined into one file. The main difference between a video and an animated GIF file is that a carefully created animated GIF file does not contain multiple frames of the same thing.
A typical animated display does not have continuous motion but lights up one circuit for say half a second, then lights up another circuit for the next half second. eg. a waving Santa typically has two circuits of the arm that are lit alternately. A video captures up to 15 “identical” frames while each arm position is lit. An animated GIF file uses only one frame for each but displays it for half a second.
When a video is compressed into a WMV or AVI etc. the software will remove redundancy from one frame to the next. It normally does it very well. The problem is that usually a large part of the display changes from one frame to the next, not just the animation. Lights move in the wind, the camera shakes slightly etc. meaning the video has to store a large proportion of the scene in each frame.
If you simply take a series of still photos and combine them into an animated GIF file, you will end up with a large file for the same reason as above. Even though you are reducing the number of frames stored, each frame is still almost totally different from the previous one due to wind movement etc. and hence the entire frame has to be stored each time. The secret is to firstly ensure that the ONLY thing that changes from one frame to the next is the actual animation and secondly to reduce size of the frames that are stored.
The animation at right is two frames. The first one is the entire scene, the second is just the two tiny wings.