A GIF file is really just a sequence of still frames stuffed into one container, along with a color palette that tells your browser which colors to use for each pixel. Most of the wasted space in a large GIF comes from two places: too many frames doing almost the same thing, and a color palette that is bigger than the animation actually needs.
When you choose Frame Reduction, the tool looks for frames that barely differ from the one before them and drops the ones that are not adding real motion. Your eye usually cannot tell the difference between 24 frames and 16 frames of the same movement, but the file size drop can be significant. Color Palette reduction works on a similar idea, cutting down the number of distinct colors stored in the file. A photo style GIF might use thousands of colors, but a simple animation or meme often looks identical with a fraction of that.
Lossless mode skips both of those tricks and instead strips out redundant metadata and optimizes how the frames are encoded, which is why it produces a smaller saving but never touches the actual picture. If you are trying to hit an exact number, like Discord's 256KB sticker limit or Steam's 8MB workshop cap, Target Size mode runs the compression repeatedly behind the scenes until it lands under your number, balancing frame and color reduction automatically so you do not have to guess at settings.
If you are starting from a video instead of a GIF, our GIF to MP4 converter works the other direction and can help if you need a smaller format than GIF altogether for something like a website background. And if your GIF came from somewhere else and you have not downloaded it yet, the GIF downloader handles that first step.