Living Images have been covered here before, of course:
From a technical point of view the "Living Images" appears to be the augmentation of a standard photo by the capture of a few additional frames before you press the camera capture button, thus allowing for the creation of a short animation that is intended to evolve the "way you view your memories". Nokia describes this as a way to "turn static pictures into living memories" and that it "deepens the way you capture and relive your pictures".
Essentially, the "Living Images" features combines a standard photo capture with Smart Camera Mode (burst) capture, albeit with a shorter burst length (around a second). Our assumption would be the the additional frame captures are at a lower resolution than the main image capture.
Live "Living Images" can be viewed in Windows Phone's standard camera roll, as shown in the embedded video, but can also be exported to Facebook and other social networking sites. Living images will also be created automatically when capturing photos using Nokia's Cinemagraph and Refocus will also appear as "Living Images", and will also be "bought to life" in the camera roll.
With the 'default settings' trick mentioned above, anyone with Windows Phone 8.1 and the new version of Nokia Camera Beta can create living images, and I was interested to see what's happening behind the scenes. After capturing an image, tapping on the (top left) circular icon brings you to a Cyan-compatible preview - in which living images are indeed shown. You can swipe left to move between your captures, as usual.
You can't access these living images from anywhere else on your phone - yet. Updates to both Nokia Storyteller and the base Photos (Camera roll) app are needed, the latter in the Cyan firmware update, of course.
Looking under the surface, I see two extra files for each photo (beyond the base of two in default dual capture configuration on the higher spec devices like my Lumia 1020):
The '.mp4.tnl' one is a 1280x720 JPG of the final frame, effectively a screen resolution preview of the main 5MP and (in the 1020's case) 34MP JPG versions, while the '.mp4.thm' file appears to be a screen resolution (so about 1MP) MPEG-encoded movie, the very short burst of frames shown as you browse from living image to living image.
Importantly, the presence of these two extra files don't appear to get in the way of other usual photo operations on the phone.
Roll on Cyan, where these images can be surfaced in more places! In the meantime, you can grab Nokia Camera Beta here.