The now-famous book Save the Cat!: The Last Book on Screenwriting You'll Ever Need, in discussing story structure for screenplays, says that each movie should begin with an opening image.
"The very first impression of what a movie is-- its tone, its mood, the type and scope of the film are all found in the opening image.... The opening image is also an opportunity to give us the starting point of the hero."The opening image is an opportunity to start out with something strong and compelling. Think of the spaceship chase in Star Wars: Episode IV- A New Hope, running off with the idol in Indiana Jones and the Raiders of the Lost Ark, or the murder that opens On the Waterfront. A frame story can be an easy way to open on a strong image. It's also an easy way to open a story as a narrator can set the scene with a wordy description. While not all movies that do this have been bad, it is a bit of a cop-out to have a narrator set your scene with words in a visual medium. A good director and writer generally should not need what often amounts to a crutch. Save the Cat! also mentions a final image which is the flip side of the coin. It should show how a character has changed and bookend the opening. A frame story is a very obvious, yet not always unsatisfying why to go about this. This being said, a movie should pretty much always close its frame story. Lawrence of Arabia, otherwise a masterpiece, leaves its ending hanging without a return to the setting of the beginning.
The biggest problem with frame stories is that they remove the immediacy of the content in front of us. Immediacy is one of the strongest elements of the film medium. Every artistic medium, but arguably less so with film, has at least one layer between the audience and the direct experience of its content. When I'm watching Star Wars, I'm obviously not right there with Luke Skywalker. There's a layer of cinematic apparatus between me and direct experience of the story. Now if the movie opened with someone telling the story of Star Wars and then their speaking faded into the images of the movie, that would now put two layers between me and the story. It would no longer be a movie about people destroying the Death Star, but a movie about someone telling about people destroying the Death Star. Why remove the immediacy? It's a needless distancing technique. With some movies, such as Schindler's List, it takes horrible events and places them safely in the past, away from us. This is disappointing as antisemitism is still a very real contemporary problem. "Never forget," but also "Never again."
Another way to use the frame story, a narrative device that is common in certain television shows is to show a portion of a climactic event and then turn the rest of the episode into a flashback leading up to that moment. This can be a very cool device if it is used to create intrigue and wonder at how the story arrived there instead of just doing the exact opposite and merely giving away the ending in advance. The movie Gandhi begins by showing Gandhi's murder and then funeral. While this is used to build up the character, later in the movie when Gandhi's killer shows up, you think, "Well, I guess the movie's about to end because there is the guy who killed Gandhi in the first five minutes."
Frame stories can be an easy way of showing highlights. This is often used in biopics, such as the wonderful Yankee Doodle Dandy. The narrator fills in gaps in the middle of the movie just as he would in the example of the opening image that I mentioned earlier. This helps frame a loose narrative thread and it gives it some logic as it is how someone might talk about events, but it can feel like a cop-out crutch for a weak narrative thread. Also, leaving the story intermittently to return to a narrator, sometimes one who is boring compared to the main story, can really hurt pacing.
Flashbacks can be used to explain an incident or set the back-drop a new piece of information. One of the best examples of this is the reveal of Thakur's big secret in Sholay. Generally, though, a flashback shouldn't last too long as it does stop the forward flow of a movie.
One of the best uses of a frame story is to show multiple perspectives on the same event. This is used to great effect in Citizen Kane. The reporter goes around interviewing different people on the life of Kane. Each has an overlapping perspective on some of the same events. Trying to piece together the perspectives is the story.
A frame story should be used toward some meaningful purpose. Just to have bookends or cutaways is not enough. The telling of the story should be a story in itself. Take the case of The Notebook. Old Noah reading the story from the notebook, which is shown in flashbacks, to try and reach his demented wife, is itself a story with much drama, not merely a set of needless, pace-killing cutaways. The camera is the narrator before any official narrator within a movie itself.
I have to further praise Citizen Kane, arguably the ultimate frame story movie. The opening image is tremendously intriguing. Rather than giving away the ending, it creates mystery. The newsreel at the beginning adds more intrigue in how it sets up the character and does so creatively and not just with a banal voice-over. The movie uses frame stories to show multiple perspectives, whether from interviewees or written archives. Finding the mystery of "rosebud" is the story just as much as trailing the life of Kane. The final image perfectly closes the movie.