Comment by userbinator

The lossy transform is important, but I think what's actually most important in video compression is getting rid of redundancy --- H.264 actually has a lossless mode in which that transform is not used, and it still compresses rather well (especially for noiseless scenes like a screencast.) You can see the difference if you compare with something like MJPEG which is essentially every frame independently encoded as a JPEG.

The key idea is to encode differences; even in an I-frame, macroblocks can be encoded as differences from previous macroblocks, and with various filterings applied: https://www.vcodex.com/h264avc-intra-precition/ This reduces the spatial redundancies within a frame, and motion compensation reduces the temporaral redundancies between frames.

You can sometimes see this when seeking through video that doesn't contain many I-frames, as all the decoder can do is try to decode and apply differences to the last full frame; if that isn't the actual preceding frame, you will see the blocks move around and change in odd ways to create sometimes rather amusing effects, until it reaches the next I-frame. The first example I found on the Internet shows this clearly, likely resulting from jumping immediately into the middle of a file: http://i.imgur.com/G4tbmTo.png That frame contains only the differences from the previous one.

As someone who has written a JPEG decoder just for fun and learning purposes, I'm probably going to try a video decoder next; although I think starting from something simpler like H.261 and working upwards from there would be much easier than starting immediately with H.264. The principles are not all that different, but the number of modes/configurations the newer standards have --- essentially for the purpose of eliminating more redundancies from the output --- can be overwhelming. H.261 only supports two frame sizes, no B-frames, and no intra-prediction. It's certainly a fascinating area to explore if you're interested in video and compression in general.