The algorithm is the second step of the four passway. An algorithm will execute some kind of function on a sequence of images and end up with a black and white image; just like the image below.
The white pixels on the image will indicate the object of interest. For example, when looking for motion, the pixels that have been changed; it depends on what the algorithm is looking for. The black pixels are background pixels.
The only convention that an algorithm should meet is that it should return a black and white image to the next step; the expositor. And of course that it requires a sequence of images as a parameter. Besides those conventions, an algorithm can do everything it wants to do. So you could create your own cat detection algorithm, marker detection, etc.
This is a trivial motion detection algorithm. Three images are compared, and the pixels that have been changed are marked as white pixels, pixels that are black are background images.