I believe it;s all done in pencil and watercolor; and it is absolutely astonishing to look at.
I also was interested in this movie, because it is a traditional Japanese tale, that I didn't really know anything about:
The Tale of the Bamboo Cutter (竹取物語 Taketori Monogatari?) is a 10th-century Japanesemonogatari (fictional prose narrative) containing folkloric elements. It is considered the oldest extant Japanese prose narrative although the oldest manuscript dates to 1592.
The tale is also known as The Tale of Princess Kaguya (かぐや姫の物語 Kaguya-hime no Monogatari?), after its protagonist. It primarily details the life of a mysterious girl called Kaguya-hime, who was discovered as a baby inside the stalk of a glowing bamboo plant.
One day, while walking in the bamboo forest, an old, childless bamboo cutter called Taketori no Okina (竹取翁 "the Old Man who Harvests Bamboo"?) came across a mysterious, shining stalk of bamboo. After cutting it open, he found inside it an infant the size of his thumb. He rejoiced to find such a beautiful girl and took her home. He and his wife raised her as their own child and named her Kaguya-hime (かぐや姫 accurately, Nayotake-no-Kaguya-hime "princess of flexible bamboos scattering light"). Thereafter, Taketori no Okina found that whenever he cut down a stalk of bamboo, inside would be a small nugget of gold. Soon he became rich. Kaguya-hime grew from a small baby into a woman of ordinary size and extraordinary beauty. At first, Taketori no Okina tried to keep her away from outsiders, but over time the news of her beauty spread.
Eventually, five princes came to Taketori no Okina's residence to ask for Kaguya-hime's hand in marriage. The princes eventually persuaded Taketori no Okina to tell a reluctant Kaguya-hime to choose from among them. Kaguya-hime concocted impossible tasks for the princes, agreeing to marry the one who managed to bring her his specified item. That night, Taketori no Okina told the five princes what each must bring. The first was told to bring her the stone begging bowl of the Buddha fromIndia, the second a jeweled branch from the mythical island of Hōrai, the third the legendary robe of the fire-rat of China, the fourth a colored jewel from a dragon's neck, and the final prince a cowry shell born of swallows.
Realizing that it was an impossible task, the first prince returned with an expensive bowl, but after noticing that the bowl did not glow with holy light, Kaguya-hime saw through his deception. Likewise, two other princes attempted to deceive her with fakes, but also failed. The fourth gave up after encountering a storm, while the final prince lost his life (severely injured in some versions) in his attempt.
After this, the Emperor of Japan, Mikado, came to see the strangely beautiful Kaguya-hime and, upon falling in love, asked her to marry him. Although he was not subjected to the impossible trials that had thwarted the princes, Kaguya-hime rejected his request for marriage as well, telling him that she was not of his country and thus could not go to the palace with him. She stayed in contact with the Emperor, but continued to rebuff his requests and marriage proposals.
That summer, whenever Kaguya-hime saw the full moon, her eyes filled with tears. Though her adoptive parents worried greatly and questioned her, she was unable to tell them what was wrong. Her behaviour became increasingly erratic until she revealed that she was not of this world and must return to her people on the Moon. In some versions of this tale, it is said that she was sent to the Earth, where she would inevitably form material attachment, as a temporary punishment for some crime, while in others, she was sent to Earth for her own safety during a celestial war. The gold that Taketori no Okina had been finding had in fact been a stipend from the people of the Moon, sent down to pay for Kaguya-hime's upkeep.
As the day of her return approached, the Emperor sent many guards around her house to protect her from the Moon people, but when an embassy of "Heavenly Beings" arrived at the door of Taketori no Okina's house, the guards were blinded by a strange light. Kaguya-hime announced that, though she loved her many friends on Earth, she must return with the Moon people to her true home. She wrote sad notes of apology to her parents and to the Emperor, then gave her parents her own robe as a memento. She then took a small taste of the elixir of life, attached it to her letter to the Emperor, and gave it to a guard officer. As she handed it to him, the feather robe was placed on her shoulders, and all of her sadness and compassion for the people of the Earth were forgotten. The heavenly entourage took Kaguya-hime back toTsuki-no-Miyako (月の都/京; lit. "the Capital of the Moon"), leaving her earthly foster parents in tears.
The parents became very sad and were soon put to bed sick. The officer returned to the Emperor with the items Kaguya-hime had given him as her last mortal act, and reported what had happened. The Emperor read her letter and was overcome with sadness. He asked his servants, "Which mountain is the closest place to Heaven?", to which one replied the Great Mountain of Suruga Province. The Emperor ordered his men to take the letter to the summit of the mountain and burn it, in the hope that his message would reach the distant princess. The men were also commanded to burn the elixir of immortality since the Emperor did not wish to live forever without being able to see her.
The legend has it that the word immortality (不死fushi?, or fuji) became the name of the mountain, Mount Fuji. It is also said that the kanji for the mountain, 富士山 (literally "Mountain Abounding with Warriors"), are derived from the Emperor's army ascending the slopes of the mountain to carry out his order. It is said that the smoke from the burning still rises to this day. (In the past, Mount Fuji was much more volcanically active.)