The Graphics Interchange Format (GIF) is a bitmap image format that was introduced by CompuServe in 1987 and has since come into widespread usage on the World Wide Web due to its wide support and portability. The format supports up to 8 bits per pixel thus allowing a single image to reference a palette of up to 256 distinct colors. The colors are chosen from the 24-bit RGB color space. It also supports animations and allows a separate palette of 256 colors for each frame. The color limitation makes the GIF format unsuitable for reproducing color photographs and other images with continuous color, but it is well-suited for simpler images such as graphics or logos with solid areas of color.
That sure makes it a lot more clear doesn't it? Whatever makes it work, it sure looks great. Below are a few which I like. Facebook does not allow these on their website but Google+ does.