Screen from Fruits Basket episode 26.
This is an example of some subtle effects. Blocking artifacts are greatly reduced. Small-scale MPEG artifacts and Gibbs' artifacts are eliminated. The original also shows telltale pixelation from the fact that it was scaled up from a lower-resolution source. In the after picture, while pixelation is not globally eliminated, it is locally eliminated in various spots. In particular, the areas that are relatively smooth to begin with. The background loses some detail, because it is not as "cartoony" and not as high-quality as the remainder of the image.
Ignore the top few scanlines... that's the fault of the person who captured the video in the first place. Also the slight difference in dimensions is my fault for not being as careful with the mouse when I selected the crop region... ^__^
Screen from Patapata Hikousen no Bouken Opening.
Here's a far more dramatic example. The original is loaded with blocking artifacts and Gibbs' artifacts surrounding the text. All artifacts are eliminated, although the scale at which they occur has had an indomitable effect on the color. A lot of smoothed out areas are still show block-shaped structures, even though the edges are blurred out. The overall blurriness is a side-effect of the source's own nature of being almost single-hued. A more "cartoony" image with the same settings will not exhibit such blurry output. Notably, the text has not been affected as is actually more legible.
Screen from Patapata Hikousen no Bouken episode 4.
For illustration, I'm including a more "cartoony" image. By that I mean, that there are distinct color regions, and hard edges in high contrast. One thing to make note of is that the settings are the same as they were for the previous Patapata screenshot (and in fact the video source is also the same), but the result is nowhere near as blurry. Almost every artifact has been eliminated. Notably, anywhere that there was a blocking artifact, you get blurry results in the output. This is often harmless as blocking artifacts dominate the background. But for instance, we see the uppermost left tip of Jane's hair having blocking artifacts, and the end result is that the edge is blurry. Similarly so for the edge between her hair and her blouse. While the sky was loaded with blocking artifacts, the blurry result, but with edges maintained created a much cleaner and less stratified look.
The rule of thumb you can find from all these examples is that relatively monotone or smooth color regions wil be blurry, whereas high contrast in = high contrast out. Blocking artifacts will mean monotone within the block itself for the source.