Watch This Animation It's Wonderful - Astigmatismo

https://vimeo.com/59618486 Rather than butcher how this was done, here's a blurb from the website where you can also support the film by purchasing a downloadable copy:

The optical effect of blur is at the core of the film, so to make this effect as beautiful and authentic as possible "Astigmatismo" is shot in a 5-level multiplane using a special lens. The animation involves cut-out marionettes and paint on glass. Everything is entirely made by hand and there are no post production effects.

It is, however, computer-assisted. The camera and the lens were entirely controlled by computer making it possible to adjust the focus and the depth of field with extreme precision, allowing for a variety of focus effects that wouldn't have been possible to create otherwise. In this way, the film combines old school animation techniques with recent advances in camera technology.