Machinima is the art of useing pre-rendered game engines to make interesting animations. You have people controlling characters and one person watching everything as the camera man. He just records everything.

What are your thoughts about the art of machinima?

Machinimas are cool. I like the World of Warcraft ones. It's not difficult to make them.

The only difficult thing about them is after so many of them are made they reach a saturation point and suddenly you have to be extra funny or extra clever in order to make people want to watch it.

Like with flash movies ;)

Yes and no... Because flash movies are oft substantially harder to make, they take longer and so more of them have to be made to reach that saturation point. But it can still be reached. Look at the sheer number of mario flashes and you'll see that the saturation point was reached... but then people stopped producing so many mario flashes, now it's at an ok level.