Applets can be incorporated just like images. Witness for example:

(drag the bouncy ball)

This is the code:

<applet height=180 width=400 codebase="" code=ooi>
        <param name=logoImage value="">
        <param name=shadowImage value="">
        <param name=ballImage value="">
        <param name=ballSquishXImage1 value="">
        <param name=ballSquishXImage2 value="">
        <param name=ballSquishYImage1 value="">
        <param name=ballSquishYImage2 value="">
        <param name=startx value="20">
        <param name=starty value="20">
        <param name=xpad value="50">
        <param name=ypad value="30">
<img src="">
The Real Thing (Explore Java at O'Reilly)