In the old days, stage plays used to open with an obligatory scene where a maid and a butler are setting a dining room and telling each other about the main characters and what they want. Then the maid and butler disappear, never to be seen again. Provide information this way in a movie and your audience will fall asleep.
Exposition is necessary because it tells the audience who to root for and why. For most Americans, they can watch two British soccer teams playing and feel absolutely no emotion whatsoever because they don’t care about the game or the history of the two teams playing. Now show Americans a baseball game between the Yankees or the Red Sox, or a basketball game between the Lakers and the Celtics, and suddenly more Americans will understand the importance of the game.
If you provide information clumsily, your audience will either miss it completely or get bored. Generally, you want to reveal exposition through action.
In “Raiders of the Lost Ark,” we don’t know who Indiana Jones is, but we see right away that people are trying to kill him, he’s looking for lost treasure, and he’s really good with a whip. We learn all that just by watching him look for treasure in a few minutes.
However, sometimes you may need to provide more detailed information that can’t easily be revealed through action. In that case, you can resort to a simple exposition that teaches the characters something at the same time it reveals information to the audience.
“Jurassic Park” did this with a cartoon supposedly geared for tourists, but also to enlighten both the characters and the audience about how they used DNA from the blood found in a mosquito to clone dinosaurs. “2012” did this when the hero meets a whacky radio announcer who shows him the story of the end of the world through animation on his web site.
Ideally, you want to reveal information through action. Think of “E.T.” where we see E.T. being left behind by his ship and men hunting for him. We don’t need to know anything about the alien technology other than that E.T.’s in trouble and men are hunting for him.
Always try to reveal information through action and conflict because it’s the fastest and most interesting way to educate your audience. As a last resort, figure out a way to teach the audience while teaching the characters at the same time. What you never want to do is tell the characters something that they already know, just so the audience can learn that information too.