It's a mini-movie that can create the effect of animation within animation. You can move the arms and legs of a figure while it runs, you can make a star or a flame shimmer while it appears on stage.
See how the flames flicker?
See how the wizard moves his arms and legs as he walks?
See how bad an artist I can be? I'm sure you can do better!
You must press Ctrl-ENTER to test a movie with a movie clip in it. ENTER alone will run the motion and shape tweens, but not the movie clips.