Computer graphics turn information about a scene into an image of that scene. For example, you might tell the computer that a character who looks like [some model an artist made] is situated in a scene with a bunch of other models around it, moving in a certain direction, with light coming from a source overhead and to the left.
If you can give the computer a lot of time to draw that image, it will produce something that looks better. It can use more detailed models and more sophisticated simulations of complicated things like light, hair, and water. This is challenging in a video game because the player is constantly giving commands, which you can’t predict, that change the scene the computer is supposed to be drawing.
On the other hand, a cutscene always looks the same – it’s essentially a short CGI movie – so you can give the computer much more time to draw it. Such a scene would be called “pre-rendered,” and it using it can be as simple as shipping whatever video clip the computer spits out with the rest of the game, then pausing everything to play that little movie when the time comes.
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