OK, I'll give you the CONCISE explaination. If you want to know more than this go to this page.

GIF 89 is nothing more than a way of saving an image. You are probably already familiar with the gif format. GIF is the format which most people save images that have been drawn or are low color (256). JPEG is used for photos. GIF 89 takes multiple images and stacks them all together into one file. It also allows for the user to define the delay between the pictures, the transparency, how the picture is updated (whether it is deleted before the next picture or the next picture goes on top of the last), and how many times the picture is looped (for now that is an infinite amount).