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The word anime, is derived from two possible situations, of which there's conflicting views on which its actually derived from and doesn't ultimately matter.
Originally, the term "Anime" was applied to all forms of animation western or otherwise in Japan.
Ofcourse that's not the only word for that.  カートゥーン is also used.

Animation -> A lot of words in Japanese languages (english, french, spanish, martian!) are taken and  massacred and made shorter. IE Pa-Ss-Kon. is personal computer.
or
dessin animé -> French word for cartoon (I think I got the french word right, I'm not french).

What it means in english can be applied however the people at websters dictionary wants it too.  Since ofcourse it's a new word in english. It's people adopting a word in english from another language that was adopted from another language hooray!