Pre-rendered means that the scene being viewed is not being processed by the system's abilities meaning that it is basically running a recorded scene. This is why the scenes have much better graphics and tend to have more going on. Most scenes in Kingdom Hearts are not pre-rendered but information that the disc tells the system to output.
So, the intro movie to KH is pre-rendered, but the scenes on Destiny Islands are ingame. Make sense?
Another case of pre-rendering is like in the Playstation Final Fantasy games where the environments other than the world map and battle screens are pre-rendered and are just a picture that the game puts behind the real time models.
And there's no need to feel sorry, MeggieKeyblader. Though this has been brought up before, if you think that you've made a discovery then you should share it so that people can ooh and ahh at you're incredible intellect... or stupidity in some of my cases where I made theories based on the parts shared in FM+ that I knew but turned out to be disproved by other information also in FM+.