I'm pretty sure they weren't saying anything about animated gifs, there.
The error message says "You did not enter the correct format for the Custom Avatar URL field. Please read the field description for the expected format." The field description does not include an actionable format specification for this error. It took me several Google/forum searches to determine that imgur is not "a website which allows image hotlinking for avatars". A list of the 2-5 most common image hosting sites which do not allow hotlinking for avatars would make this far more helpful.
Respectfully, that's really not how that works. If the error message can't be changed, this is an unfixable bug, but it's still a bug.