The animation was CGI, in a kind of cartoonish style for the characters. It worked pretty well. There were some characters that looked kind of artificial, and after a bit we realized that it was mostly likely intentional.
My only real complaint is that I wish they'd been able to integrate some of the big chunks of exposition more smoothly into the action. But I guess that's what happens when you condense four books into a single movie.
(Sidenote: the anime only came out in 2004, but the widely-acclaimed manga it's based on were first published in the mid-80s. I kept getting confused because I first heard of Appleseed ages and ages ago, but it's clearly a very recent movie, so WTF?)