Parallax is how one object can appear to be in two different positions when viewed from two different lenses, generally your eyes.
If you look at an object using your left eye (with your right eye closed), then look at the same object but switch which eye is viewing and which is covered the background behind the object will appear to shift even though neither have moved.
This affect also happens when you, the viewer change position and look at the same general view. Objects that are closer to you will appear to move more than objects which are further away.
Imagine putting a post in the ground 6 feet in front of you, so that you form a straight line between yourself, the post, and a distant mountain. If you move 3 feet to the right, the post will appear on the left side of mountain. If you move 3 feet back to the middle, then 3 feet to the left, the post will appear on the right side of the mountain. The post seems to be moving horizontally significantly, while the mountain appears not to move, or move only a minuscule distance.
You can fake 3D effects by layering different images one on top of the other and shifting them at different rates of speed, so long as you make sure the further the layer is back, the less you move it.
A good way to see the difference is to compare the original Super Mario Bros game for NES with the remake version in Super Mario Allstars. The original game featured fixed backgrounds the moved at the same speed as the foreground. The remake added a mid layer and a far layer behind the foreground which moved at 2 different speeds, generating a simple 3-d effect.
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