A strong showreel is essential if you want to get any kind of work in moving images - whether that means video, effects, 2D or 3D animation or Flash graphics. Even if you're creating still images, it can be a useful sales tool, providing a handy way for potential employers to thumb through your portfolio without having to arrange appointments and drag you across town.
Essentially, a showreel is a short video clip (around three minutes and rarely more than five) which showcases your best work. There are few hard-and-fast rules, but if your showreel doesn't show the quality and breadth of your work with impact and style, it's likely to be quickly binned.
When creating a showreel, your first job is to be very clear on who it's going to and what you want to get out of it. It's not unusual for someone with a range of skills to have two or three different showreels aimed at different markets.
Industry employers will be looking for specific things - if you're asking for a job in animation, they won't care much about textures and backgrounds. Equally, if you're after work designing games characters, complex lighting isn't going to impress.
You're showcasing your work to people within your industry in the hope of getting a job, so you can drop the flashy transitions and out-of-the-box effects because your peers will be able to tell a mile off just how cheap and easy they are. They'll know if you've created your breakdancing teddy bear with the free motion capture data included in your 3D application or if you've animated it yourself. They'll be able to see if your spinning title sequence is one of those available in one-click from After Effects 7's presets box. And they'll be perfectly aware if you've used a Gaussian blur on your photographic background because it's quicker than using a lens blur.
Conversely, somebody who draws (or commissions) comic strips for a living will be able to see that your style is unique. A professional at Framestore knows the difference between global lighting and radiosity and if you've mastered hair, depth of field, cloth and fluid dynamics to simulate a fur coat in a washing machine, they will be impressed whether you've done it in a Hollywood movie or a school project.
If you're just after a really different way to showcase your design work - Photoshop or Illustrator images - the showreel route can also be a very successful road down which to travel. It's different enough to help you stand out from the crowd, it shows real commitment and a genuinely fresh approach to showing off your work to the best effect.