This is a fantastic example of animation, written and directed by Ari Folman. Although it could easily be mistaken as rotoscoping, animation where live footage is drawn over, it is actually mainly flash animation. Illustrations are cut into many pieces then moved in sync to create the illusion of movement.
The overall visual aspect of the film is quite breath taking. The drawing style and colouring is fantastic and this along with the music creates a beautiful piece of animation!