CGI is a technique used for special effects in films and animation. It stands for computer generated imagery. CGI is made by rendering a model on a computer and animating it. Like a computerized version of stop motion. Recent advances in computer technology have allowed for more realistic effects and even full movies made only through CGI. Examples of films produced fully in CGI include the Toy Story series and many of Pixar and Dreamwork's films.
There are two types of CGI. Shell frame animation and solid frame animation. Shell frame animation is used in most video games and works by rendering a shell in the computer and then putting a texture over it and animating it. It is typically unrealistic and blocky, but it is also easier to use. Solid frame animation works by rendering the entire object instead of just a shell and is used for movies more often than not. There is also motion-capture CGI in which an actor is filmed then the computer put the CGI image on top of the actor's image. This is often used in live action films.