It is scaling and moving the background image, most likely using coded tweens for the scale and position changes. Here's a link to another posting that might help a little for AS2 tweening:
Thanks for your help, Ned.
But I still don't really understand here, especially the coding.
I tried use stage scaling and some other transition method, I am not quite sure and still having no luck with it.
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You need to create the background as a movieclip and apply the sacling and positioning to it, not the stage.
But I got the transition part OK working, however the zooming part I still don't get.
Because as you can see on the example site I've given, is not only the transition however it kinda zoom in making the background image more bigger.
The zooming is done by scaling the movieclip larger and smaller. You can tween the location (_x/_y) properties as well as the _xscale and _yscale properties all at the same time.