Originally Posted by
Kirobaito
In the Pokemon world, Scientists have been perfecting for years how to convert mass into energy. Pokeballs are an example of this. The Pokeballs are able to change a Pokemon into energy and thus change its volume into that which will fit into a soft-ball, or sometimes golf-ball sized sphere.
As far as what occurs inside the Pokeball, it is filled with what appears to be small mirrors. Using holographic technology, these mirrors create for the Pokemon a comfortable and natural environment.