Optical interference moiré methods are analyzed using Fraunhoffer diffraction theory to relate general large surface deformations to the fringes observed. This analysis determines the Almansl strain in the current configuration from the gradients of the fringe number function. The analysis shows the advantages of an experimental scheme that allows the virtual reference grating to be varied. The ability to vary the virtual reference grating results in a larger dynamic range and the ability to maintain a fringe spacing for maximum accuracy. A moiré microscope has been constructed which has this ability. Digital image processing coupled with optical filtering and phase control is used to enhance the accuracy of the fringe measurements. The variable virtual-reference-grating capability is demonstrated by using it to highlight several aspects of the deformation field near a crack tip in a single crystal of iron-silicon.