Complex sentence: He stepped down to animator in 1940 after Lantz reverted to being director, but continued to play an important role in the production of the shorts, and stepped up to being the studio's lead director of Woody Woodpecker shorts when Lantz retired from directing in 1942.
Split into simpler sentences: He stepped down to become an animator in 1940 after Lantz reverted to being director. However he continued to play an important role in the production of the shorts, and stepped up to being the studio's lead director of Woody Woodpecker shorts when Lantz retired from directing in 1942.