Janko Roettgers, Variety:

Netflix is cutting each and every video into one-to-three-minute-long chunks. Computers then analyze the visual complexity of each and every of these clips, and encode with settings that are optimized for its visual complexity.

The resulting potential bandwidth savings are significant: Compared to the encoding tech Netflix uses for streaming, using this chunking method in combination with the new VP9 codec saves around 36% of bandwidth on average for videos that look the same to the human eye.

This new approach sits on a curve. On one end, the videos are much smaller, saving you space on your phone. On the other end, the videos look much better. What you get on your phone depends on the complexity of the particular chunk you are viewing. Interesting stuff.