In the example above the letterform on the left shows the pixel layout of a lower case "r". There are only black and white pixels side by side with a very unnatural square shape. This is fine when the pixels are very small. However as you can see, when enlarged the left image looks very pixelated.
On the right the image has been anti aliased. Instead of pure black adjacent to pure white there are blended gray pixels on the border. This makes the transition from white to black more subtle and makes the image seem sharper and less blocky.
Generally you don’t want to anti alias lineart, because it has to be reproduced at high resolution anyway. Anti aliasing a 600 dpi block of small text will just make the printed result seem fuzzy. However, a sketch or photographic element will benefit from it.
