Variable block-size motion compensation (VBSMC) is the use of BMC with the ability for the encoder to dynamically select the size of the blocks. When coding video, the use of larger blocks can reduce the number of bits needed to represent the motion vectors, while the use of smaller blocks can result in a smaller amount of prediction residual information to encode. Older designs such as H.261 and MPEG-1 video typically use a fixed block size, while newer ones such as H.263, MPEG-4 Part 2, H.264/MPEG-4 AVC, and VC-1 give the encoder the ability to dynamically choose what block size will be used to represent the motion.
Read more about this topic: Motion Compensation
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