Unlike your eyes and brain, a camera can't easily adapt to changing light conditions. While we can move inside and out and our brains correct for changes in light, a camera needs help.
To our eyes, indoor and outdoor light looks pretty much the same, except for brightness. However, that difference in light level makes the color of the light very different. Low light, like a candle, tends to be red in color while sunlight skews toward the blue range. We can automatically correct for this color difference, but camcorders can't.
In order for a camera to shoot video with proper color, we need to tell it what white looks like in the light we're shooting in. This is because white reflects all colors. Therefore, if the camera knows what all the colors look like reflecting off something white, it can correct for every other color down to black.
Some cameras have a manual white balance feature that can allow the user to lock the setting so it won't drift. To use it, you would point the camera at a white object (like a piece of paper) and execute the function. If your camera has this feature, it's probably in one of the settings menus.
Auto white balance is a camera's way of guessing what white is. The camera is programmed to search for objects that are probably white. It uses this data to set the colors as closely as possible. However, this setting can drift as your subject moves in front of the camera or lighting changes. While the camera is pretty close most of the time, it's often better to use a manual setting.
There are times when you may need the auto white balance. If you are moving between indoors and outdoors while shooting, the automatic setting will keep the video looking better between the two locations. However, if you have the time to set it manually, you'll get more accurate results.
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