Yeah. He's not creating a video, he's creating a program that displays a video. If you create a 320x240 program that animation and call it a video, you might as well call every frame an array of 300 16x16 icons.
The point is pretty cool though, algorithmic compression is pretty awesome, especially when you don't have to conform to any particular end result. A fresh Minecraft world is a 240k jar file used as a decompression tool, and the data is a single integer (the seed). In the end the result is some 9 million times the surface area of the Earth.
However, start modifying that world and the data needed to store it balloons. Make a world that accurately mimics the surface of just Iceland and you're going to be looking at a pretty large file.
Accept a world that's a bit of simplex noise and Brownian motion and let yourself be awed. Make a video of rotating around a fractal made from a simple formula - that looks cool. Try and compress a video of your daughter's first steps and you'll get something significantly larger than an icon. Especially an icon that's at least run-length encoded.