The basic idea dates back to 1915 (it's called 'rotoscoping', credited to Max Fleischer, creator of Betty Boop and the first Popeye cartoons): shoot the actors live, trace over the footage frame by frame, and you've got a cartoon.
Linklater's rotoscoping technique was more high-tech. He fed footage of actors in humdrum settings into one of those fancy-schmancy computer programs, which turned each photograph into a stylised 'painting' consisting of regions of flat colour, giving the final film the appearance of a screen-printed poster (or a comic book without black lines separating the figures) brought to life. In the words of one critic: 'Staring at the screen is like reading a book on a water bed on a raft floating in the middle of the Atlantic.' This wasn't meant as a compliment, but it's probably what Linklater was trying for. In a story like this you wouldn't want anything to appear too solid. It's about - if anything - dreams. The unnamed protagonist is trapped in a dream (actually a dream-within-a-dream) which he is trying to wake from, and as he searches for the key to the nature of dreams he stumbles from one weirdo intent on broadcasting his or her view on existence or illusion or the meaning of life or some such, to the next. If I haven't made Waking Life sound like the oddest thing on our program, I haven't described it properly.