"those nice pictures are stored somewhere in China, and when I click on this mouse, it travls millions of miles, through this phone line, and come to this screen"
They do? :-\
maybe show them them the binary file of a gif image, and explain how that somehow produces that nice picture on the screen?
I'm not entirely sure, because I don't really know the gif format, but probably bmp would be easier to explain and to understand :-) It would probably be interesting for them, too, to understand how images can be stored :-)