This paper is concerned with video microscopy, an analytical method of growing importance for the studies of colloid suspensions. Particular emphasis of this work will be laid on the derivation of simple recipes for the computation of static and dynamic pair correlation functions from the microscopic images. The strengths and also the weaknesses of the method will be discussed in detail. We will also present a selection of results gained by this method to demonstrate, that video microscopy is a valuable addition to the well established analytical methods like neutron and laser light scattering in colloid science.