Video conferencing is actually a pretty old technology, and really dates back to the beginnings of television. Although it has been in constant evolution for decades the revolution happens when high speed Internet meets cheap computing power.
Moving pictures are created by displaying many static images rapidly in sequence. Humans can process 10 to 12 separate images per second, perceiving them individually. Once this rate is exceeded the illusion of continuous movement is created. The early silent movies operated at 14 frames (images) per second (FPS). Modern TV and movies use 24-30 FPS.
When we look at the quality of a video image the detail in each of the images is just a important as FPS. Picture detail is typically quoted in terms of pixels, where one pixel is one “dot” that can be a specific colour. The more pixels you have the better the picture will look, and the larger you can blow it up before you begin to notice individual pixels. To put things in perspective here are some common horizontal x vertical pixel resolutions
So with video the more pixels we have, and the higher the frame rate, the better the picture we see will be.
There is however a very simple mathematical reality:
While a number of clever techniques, falling under the broad umbrella of compression (like zip files) can be used to reduce the data cost no one has a magic bullet that lets them compress video data much better than anyone else. In fact most companies use exactly the same techniques. You should probably read the last two sentences again.
Video conferencing technology works like this.