Exaggeration does not just mean distorting the actions or objects, but the animator must carefully choose which properties to exaggerate. If only one thing is exaggerated then it may stand out too much. If everything is exaggerated then the entire scene may appear too unrealistic, the balance must be right.
Exaggeration is used in animation when trying to decide whether to be realistic or not by playing with the levels of exaggeration used an animator can achieve this. Exaggeration can be used on the character or elements in the storyline itself.
The scene in the Lion King has the correct amount of exaggeration. When finding an example for this principle I tended to focus on the features of the characters, the eyes in particular.