Hi there, I can display images on marker using flarToolkit in flash as3 but can anyone suggest a good link/tutorial which explains how to use animation with augmented reality in flash?
Well, more than anything else you need to understand PaperVision3D to really be able to do cool stuff with flarToolkit.
Fundamentally flarToolkit is analyzing the camera's output and figuring out where, in 3D space, the marker exists and how it is oriented. You can then take that data and use it with PaperVision3D (or really, any 3D engine, though I believe the current version of flarToolkit is fairly tied to PV3d).
So first off, here's a basic tutorial for flarTookit: http://www.mikkoh.com/blog/?p=182
Then you'll want to bone up on PV3D: http://blog.papervision3d.org/ http://pv3d.org/
You can make things as simple as 2D animations that are essentially planes in 3D space to full on 3D characters - it's up to you and your imagination!
As Branden mentions, Augmented Reality is essentially a container for PV3D/Away3D/Etc.. code that is then run and the output is transformed to fit the values given to it by the FLARToolkit.
Here is a post that shows you how to do some basic animation + using As3dMod : http://www.harrynorthover.com/blog/2009/04/15/getting-started-with-augmented-reality-flartoolkit/