Speaking of animations. One thing that has to be noted when it commes to Yoshi's Island is the was they used the Super FX chip. This enabled the SNES to do scaling and 3d sprite rotations and made it possible to make games such as Starfox / Starwing.
YI used the chip in unique ways. One of them being to animate sprites by rotating and scaling sprites. You can see that in a lot of the animations fil_razorback linked to, their limbs are slightly rotated. If you were to jump on an invincible enemy in YI, it would scale to create a bouncing effect. The Shyguys and a lot of the other enemies feet and limbs are just rotated blocks as all their walking and jumping was handled real-time by the chip. This is something that is used in Flash animation today, the only difference being that YI is not using vectors, but pixels. I would think that the black outlines helped the rotation in YI because when you scale pixels (like for example in ms Paint.) it gets messy. Since the style was already made with messy black outlines, you wouldn't notice as much.
Akira mentioned that the backgrounds are hard to separate from the foreground. I never had a problem with this as I was playing it, mainly because all stages had paralax scrolling and sometimes multiple backgrounds. Notice that for stages where the background does *not* move, like here:
and here:
, there is a very clear difference between the Player sprite and the background. The latter image also has a triple paralax star background for the black areas.
There is also a discussion wether the backgrounds were made in 'pure pixel' or if it was hand drawn and then converted into the game. I've found a few hand drawn wallpapers from YI that are pretty much identical to the backgrounds of the game, but I'm sure this documented somewhere.