It's all done with CGI, also the character animation. Now, most of the time that makes for really stilted characters, but apparently the technique has improved a lot in recent years: the characters move rather smoothly, and the faces are really expressive.
We really liked the series: full of adventure and wonder. I especially liked the harpies: they are unrepentantly malicious. And the true hero of the series is Lovis, just sayin'.