Intro
I'll start by explaining how the eye works. Our eyes have thousands if not millions of tiny cells which react to certain things we see. When you combine all the data each one of those cells gather, you get an image.
The eye doesn't see things frame-by-frame. Instead, the eye cells are constantly sending information to the brain as they react to changes in the world we live in. Because the cells of the eye take time to react and to send data to the brain, we get a blurring effect on fast moving objects.
Motion Blur
We now understand that our eyes don't see frame-by-frame, but how does motion blur improve the situation. To start, motion blur makes frame-by-frame motion look more natural because it simulates what our eyes see in real-life. Another thing it does is show a trail of where objects have been and therefore the brain can interpret what was between two frames. This makes frame-by-frame motion appear smoother and makes it look more natural.
Brightness Eats Darkness
Note: When I refer to monitor, I mean a CRT monitor, not an LCD.
Our eyes are more sensitve to bright light than they are to dull light. Your computer monitor flashes between 60 and 100 times per second, but why dont you see this and why are our eyes more sensitive to bright flashes than flashes of black?
Here's an example. When someone shines something bright in your eye (like a torch) or you stare at a light bulb and then close your eyes, you'll still see a bright spot, this is because bright things leave after images. The brighter the light, the longer and more defined the after image is. So even though your monitor flashes black 60-100 times per second, you don't see it because the flashes of light overpower the black.
Our peripheral vision is more sensitive to light, so if you stare of to the side of your monitor, you may see it flashing.
How to See Without Motion Blur
Note: The trick of seeing without motion blur only works with CRT monitors. Fluorescent lights can also work it's generally harder to notice as they have a higher refresh rate than CRT monitors.
Thanks to our monitors, we are a able to see without motion blur. Wave your hand quickly (like you are waving goodbye) away from the monitor so your monitor isn't behind your hand. You'll notice the motion blur. Now, do the same thing but move your hand between your eyes and the monitor (so you see your monitor in the background). You'll notice that there is no motion blur. You're now seeing your hand moving at the speed of your monitors refresh rate (usually about 75 fps). The reason you're not seeing motion blur is because the monitor is flashing (like explained above). You're only noticing your hand when your monitor flashes back to black.
Did you notice how much your hand was stuttering when waved in front of your monitor compared to when you waved your hand next to your monitor. This is why Motion Blur in games can drastically improve how a game looks.
Facts
Here are a few facts about your eyes...
- Your eyes blur more in low light as it takes longer for the cells to react to light changes.
- Air Force pilots could identify a plane which was flashed on screens for only 1/220th of a second.
- Your eyes see things upside down. This is because the inside of your eye is curved inwards. Look 'into' a shiny spoon and the reflection will appear upside down.
- Although film runs at 24 progressive frame per second, you actually see 72 frames per second in a cinema. This is because you see each frame 3 times in a row. If they didn't do this, then the gaps between each frame (when the screen goes black) would be too noticable and would give everyone a headache.
Here's a video made by Crysis-Online which shows the difference between motion blur and no motion blur. I've exaggerated the effect to try and make it clearer to see.

I hope you've learnt something from this article. Check out this site for more info...
How Many Frames Can The Human Eye See?
Cheers!
