The author of the novel, George Orwell, uses the animals as symbols to represent humans. This technique is used to great effect in fairy tales, fables, and other children's stories. The purpose is to either satirize or mock human behavior and, in the process, teach certain life lessons. It is a generally-known fact that fables were—and are—used to teach children morals and values, inculcate in them an appreciation of good, and make them aware of the bad. In this manner, it is believed, children will understand what to strive for and what to avoid.
Orwell purposely chose animals to represent human society. His fable is a critique of communism. More specifically, the story is a parody of the Russian Revolution and the ensuing tyranny which followed the ousting of royalty and the creation of a supposedly free and fair society in which everyone was equal and where all resources, production, and the fruit of such production, was to be shared by all.
The animals in the novel represent a microcosm of such a society and are not only a reflection on the abuse of power in communist Russia during the time of Stalin, but also inform of the atrocities in all totalitarian communities. Orwell's novel is therefore an indictment of a universal reality—that in all tyrannical systems, leaders are driven by greed and power and become even worse than their erstwhile corrupt leaders.
The author deliberately chose this format for his novel to make us aware of how naive and gullible we can be, just as children normally are. The fable brings home a message of both good and bad but, unlike a fairy tale, our story does not have a happy ending, for bad triumphs over good since those who are good and oppressed, either lack intelligence or resources, are brutally driven away or executed, violently oppressed and intimidated, too naive and loyal, or too apathetic to bring about change.
All these factors are brought to life by the actions of the animals. Napoleon, who represents Josef Stalin, is a dictator who ruthlessly gains and maintains power. He rids himself of his fiercest opponent, Snowball, who is based on Leon Trotski, who opposed Stalin's plans and had to flee Russia but was finally traced and executed in Mexico by Stalin's secret police.
All the other animals are representative of some or other figure or group. Boxer, for example, is a symbol of the hardworking and loyal proletariat, while Benjamin represents the stubborn and recalcitrant upper- and middle-classes who begrudgingly accept the tyrant's rule but do nothing about it. The sheep represent the unintelligent acolytes of such a tyrant—unquestioningly doing his bidding and almost frantic in their desire to obey their master. Each animal or class of animal is thus used to represent a section of human society.
It is in this manner that the author uses the animals to "represent human society in miniature."