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What were the banned episodes?
There were a few episodes banned in America (and the rest of the world), for various reasons:
"Electric Hero Porygon" is the most famous Pokémon episode, and the one cited when people speak against Pokémon. There was an unfortunate incident when this one was shown - there were flashing strobe lights in the episode, and these lights sent many children into epileptic fits. Hospitals were crowded with these children. All copies of this episode that could be located were destroyed.
"Holiday in Acapuroo" was banned because a male character, James, used inflatable breasts. It was later released.
"Legend of Dratini" was banned.
"The Tower of Terror" was banned after the terrorist attack on the World Trade Centre of September 11, 2001, because of its name.
What's inside a Pokéball?
According to the Pokémon website, each Pokéball contains the natural environment of the Pokémon inside it, so it can play and be happy. :P