After you understand the inner workings of your camera, you see another knob/setting/button on your camera and you wonder what it is. It's white balance. White balance, like many other things, has its roots in film photography. White balance, as we will see, will also illustrate yet another way our eyes are superior to a camera.
One way the human brain keeps you on an even keel visually is adjusting your eye's own white balance. If it didn't, you would see things like a camera that had no white balancing capabilities would.
The big secret is... light (and white) isn't all the same color. The lights in your home, the sun, a cloudy sky, a scientific lab, a sporting arena.. all have output devices that produce very different kinds of light. The normal incandescent lights in your home are called tungsten lights. They make a very warm light. Warm in the photography world means a color that is closer to orange than blue. A midday outdoor scene makes a much cooler (blue) light due to the blueness of the sky reflecting on everything. This is why days that are heavily overcast are warmer than cloudless days. There is no blue sky (or very little) to bathe the world in blue light.
Sunsets are typically very warm. The orange, yellows and salmon colors in a sunset cast a very warm light on the earth and can give everything a golden sheen.
The scientific lab normally has overhead fluorescent lights. These lights give off a decidedly green color. Sodium vapor lights, HID, mercury halide lights can all put out differing colors of light as well. It is best to try to evaluate each of them on their own when that time comes.
Now that you know that all light isn't the same. Of course your next logical step is to wonder, how the scientists classified these different colors of light. Right?. .. Right?!? (crickets chirping) Ok, so maybe you didn't even think about that, but it's worth it to take a second to understand it. It might come in handy and if nothing else, you can really impress the babes.
As scientists are prone to do, they want to put numbers to things and figure out how to calculate the world. Someone decided they wanted to put numbers to the different colors of light. And made this really elaborate contraption that burned things and registered what color was produced as the temperature got hotter. Just like in a campfire (or blowtorch) the lowest temperature fire is a yellow and orange fire. And the hottest fire is a blue or indigo fire. The same is true with color. The lowest temperature light is an orange light the coolest, a blue.
One of the paradoxes of photography (and there's a few if you haven't noticed already) is that a light that is a low temperature is referred to as being warm. And a high temperature light thought of as being a cool light. Just keep warm = orange (like a campfire) and blue = cold (like those cool new Coors lite bottles)
You can see the different numbers on that scale and those numbers represent the temperature (in kelvin) of the light source that makes them. For example, a typical incandescent bulb is 2870 Kelvin. You can see from the chart that that is a very orange color of light. Daylight (and flashes) are estimated to be around 5600-5700 Kelvin; a much cooler color than the lights in your home.
A short list of other light sources:
Matches - 1700K
Sodium Vapor - 2100k
Midday Sunlight - 5600k
Xenon Short Arc - 6400k
Typical Summer Day - 6500
Blue sky - 12,000-20,000k
Having learned all this awesome information you can now begin to make some educated choices on the white balance of your camera. Normally you have these settings to choose from
Tungsten - usually represented by a light bulb
Daylight - represented by a sun
Cloudy - represented by a cloud
Shade - represented by a house with a weird triangle shade thing
Fluorescent - represented by a blinking bar looking thing.
Flash - represented by a lightning bolt
Of course your mileage may vary and your camera might have different pictures, but these are supposed to be intuitive, so in theory, i shouldn't even have to point these out!
Some advanced cameras (Like a Nikon D200) will let you choose your own Kelvin number for you white balance. This is useful if you know what you're doing. If you don't, stick to the pictures until you have a firm grasp of it or you have some specific reason for using a custom Kelvin number.
Another useful item is the white balance value that you can set yourself. If you are in a room with a mixed bag of lighting ( fluorescent lights on top, sunlight streaming in a window, tungsten bulbs around a beauty/makeup mirror) you might be faced with a whole cornucopia of light colors. None of your presets are going to be 100% correct. Your only real choice besides picking one and hoping for the best is to measure it yourself. (If pressed, I would choose the fluorescent in this situation because fluorescent light looks terrible with other white balances and i would hope this setting would be the lesser of all evils) You could buy a Kelvin reader for a few thousand dollars (hey get it from my sponsor Adorama! link on the upper right side) or you could get a white sheet of paper and make your own white balance setting.
To make a custom white balance reading and setting you will have to consult your manual as each camera is different. On my Nikon D50, with the camera active, you can hold down the white balance button and the PRE begins to flash. you then take a photo of a white card (a white piece of paper) and the camera uses that as its white balance until you change it. You can also take a photo and then go through a menu system on the camera to tell it to use that photo for white balance purposes. My Nikon D200 is a bit different in that you have to move the slider to PRE while holding the WB button down too. So, as you can see, each camera is a bit different in the details but all will produce the same results. This ought to at least get you in the ball park and keep those skin tones from looking like they are the next love interest of Captain Kirk.