Each of the circles contains three segments, and by rotating the inner and outer segments at slightly uneven rates in comparison to the central segment it creates the illusion that the entire circle is moving, growing, or shrinking. The arrows are just there to make you not notice the different segments of the circles.
I think the colored segments are rotating at different rates.
Because of that, when they sync up in certain ways, like when we see the blue section of one circle overtaking the blue section of the other circle, our brains interpret that as the circles getting closer together rather than “this circle has a higher angular velocity”. If one blue section is receding from another, our brains figure the circles must be moving apart.
I’m not sure the arrows cause any part of the illusion. When I covered them with my fingers, the circles still seemed to be moving around.
Anyone else?
Everything you see is actually your brains interpretation of what things will look like in a fraction of a second. This greatly improves our reaction time. As a result, movement humans see is actually a function of patterns and expectation. This optical illusion takes advantage of this fact and creates an expectation of movement within our brains.
In fact, if you look very closely at the center gray space between the two circles, you can see that the boundaries are not moving at all.
If you look carefully at the edges of the segments, they’re “broken” on the sides that are in the direction of the illusory movement. For instance, the blue segment will have a one-pixel yellow border on the inside edge of one half, and a one-pixel yellow border on the outside of the other half. It’s easy to see if you pause the video at different stages of the animation. As the direction of illusory movement changes, which sides of the circle have “broken” segments also changes.
I don’t know the specifics of how exactly that leads to the perception of motion, but I suspect that it tricks the brain in a similar way as the [café wall illusion](https://en.wikipedia.org/wiki/Caf%C3%A9_wall_illusion).
Each segment is leaving a “tail” of its own color over the next segment. Thus when it rotates from one segment to the next the next segment actually is moved a little bit to the side by one pixel. The tail does not go all the way around though so you could say that it “moves back” before reaching the third segment.
You do see it actually move over but you don’t see it move back so instead of vibrating it has the illusion of only moving in one direction.
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