What about animation on DVD? Doesn't it compress...

Compression does not affect or censure the content of the video. Compression rate effects will be noticed on any video regardless on whether the video is comprised of animation or other content.

Some people claim that animation, especially hand-drawn cell animation such as cartoons and anime, does not compress well with MPEG-2 or even ends up larger than the original. Other people claim that animation is simple so it compresses better. Neither is true.
Supposedly the "jitter" between frames caused by differences in the drawings or in their alignment causes problems. An animation expert at Disney pointed out that this doesn't happen with modern animation techniques. And even if it did, the motion estimation feature of MPEG-2 would compensate for it.
Because of the way MPEG-2 breaks a picture into blocks and transforms them into frequency information it can have a problem with the sharp edges common in animation. This loss of high-frequency information can show up as "ringing" or blurry spots along edges (called the Gibbs effect). However, at the data rates commonly used for DVD this problem does not usually occur.