Douglas Harper's Etymology Dictionary
"creation of the effect of animation in live actors," 1947, from pixilated. Also see pixelation.
Wikipedia
Pixilation (from pixilated) is a stop motion technique where live actors are used as a frame-by-frame subject in an animated film, by repeatedly posing while one or more frame is taken and changing pose slightly before the next frame or frames. The actor becomes a kind of living stop motion puppet. This technique is often used as a way to blend live actors with animated ones in a movie, such as in The Secret Adventures of Tom Thumb by the Bolex Brothers.
Early examples of this technique are El hotel eléctrico from 1908 and Émile Cohl's 1911 movie Jobard ne peut pas voir les femmes travailler (Jobard cannot see the women working).
The term is widely credited to Grant Munro. He made an experimental movie named "Pixillation", available in his DVD collection "Cut Up – The Films of Grant Munro".