A satire is a work of literature which uses humor, irony and exaggeration to criticize people, places or events. As such, Animal Farm is Orwell's attempt at satirizing the Russian Revolution of 1917 in which the Bolsheviks came to power and the totalitarian rule of Joseph Stalin which began in 1924. This is made clear from Chapter Two when the idealistic animals, who represent the Bolsheviks, overthrow their human master, Mr. Jones, and take control of the farm for themselves.
Over time, one of the pigs, Napoleon, rises to become the leading figure on the farm. Like Joseph Stalin, Napoleon is single-minded, ambitious and prepared to use violence to achieve his aims. Napoleon's conflict with Snowball in Chapter Five, for example, mirrors the conflict between Joseph Stalin and another Bolshevik leader, Leon Trotsky, which resulted in the latter's expulsion from the Soviet Union.
By writing Animal Farm as a satire, Orwell makes clear his views on the events in Russia and on the leadership of Joseph Stalin. Specifically, he argues that Stalinism did not improve the lives of the people of Russia, just like it did not improve the lives of the animals on the farm. In fact, Napoleon was even more cruel than Mr. Jones, just as Stalin was far worse than any of his political predecessors.
In general, Animal Farm is a satire of the dangers inherent in the exercise of political power. Specifically, it was written as a critique of the Soviet Union under Josef Stalin, where a revolution aimed, at least in theory, at establishing a new order where human equality would be possible, had degenerated into a totalitarian nightmare. In Animal Farm, the animals begin with similar motives, but the society they create is unequal almost from the beginning. The pigs, as the leaders of the revolution, quickly subvert it to their own ends, and set themselves up as its leaders, "more equal" than the other animals. Like Stalin, Napoleon the pig uses terror and misinformation to maintain his power, until in the end, the inequalities are recreated in total, as the animals see that they cannot tell the difference between the pigs and the humans they fought to emancipate themselves from. His satire is successful because of its clarity. It is obvious to the reader who understands the development of totalitarian governments in Orwell's own time which animals represent which people.