The two most common files on a camera memory chip are JPEGs and AVI files. Typically, memory chips do not get fragmented, but if the chip is full, or individual files have been deleted, then fragmentation can occur. As long as the FAT file system remains intact, there is not problem. If the chip is deleted, or formatted, then all details of file fragments is lost.
Using signature analysis, many files will be recovered, but the fragmented ones will be lost. An AVI file has a very strict structure, and it does rely on the final 16 bytes of the file being intact, and in the correct location. In other words, a 99% complete AVI file will not read - although a repair would be possible.
Once the CnW software has done a recovery of all files on a memory chip, the files are tested to see if valid. At this point, it will try and reconstruct non valid AVI files. For more details, see the section on Fragmented JPEGs. and ensure that the Process Fragments is enabled.