.gif (pronounced GIFT without the T) stands for Graphic Interchange Format, which means these files are animated images. By compressing photo files together and playing them back quickly, the image becomes animated, much like an animated film. Think Steamboat Willie!
These files were very popular decor in the late 90s when Internet users were creating websites just for fun, but when graphics began to improve on the web in the early 2000s, .gif files disappeared.
.gifs have resurfaced in the last few years with vast improvements and are mostly used for entertainment purposes.
Look how much .gif files have improved since they became popular in 1996: