In video compression algorithms a residual frame is formed by subtracting the reference frame

Reference frame (video)

Reference frames are frames of a compressed video that are used to define future frames. As such, they are only used in inter-frame compression techniques. In older video encoding standards, such as MPEG-2, only one reference frame – the previous frame – was used for P-frames...

 from the desired frame. This difference is known as the error or residual frame. The residual frame normally has less information entropy

Information entropy

In information theory, entropy is a measure of the uncertainty associated with a random variable. In this context, the term usually refers to the Shannon entropy, which quantifies the expected value of the information contained in a message, usually in units such as bits...

, due to nearby video frames having similarities, and therefore requires fewer bit

Bit

A bit is the basic unit of information in computing and telecommunications; it is the amount of information stored by a digital device or other physical system that exists in one of two possible distinct states...

s to compress.

An encoder

Encoder

An encoder is a device, circuit, transducer, software program, algorithm or person that converts information from one format or code to another, for the purposes of standardization, speed, secrecy, security, or saving space by shrinking size.-Media:...

 will use various algorithms such as motion estimation

Motion compensation

Motion compensation is an algorithmic technique employed in the encoding of video data for video compression, for example in the generation of MPEG-2 files. Motion compensation describes a picture in terms of the transformation of a reference picture to the current picture. The reference picture...

 to construct a frame that describes the differences. This allows a decoder

Decoder

A decoder is a device which does the reverse operation of an encoder, undoing the encoding so that the original information can be retrieved. The same method used to encode is usually just reversed in order to decode...

to use the reference frame plus the differences to construct the desired frame.