Updated: Jun 26, 2018
Understanding the concept of White Balance
White balance is the fourth most important camera setting, after the exposure triangle (shutter speed, aperture, and ISO), that must be decided. White balance is the important key that decides the look of any image, by designating, "what color should appear white" in any photograph. That is, for example, if we click a photo of a grey or white subject in outdoor under broad daylight, and if we set the white balance to daylight, then the picture of that subject would be "correctly" rendered grey or white.
The White Balance setting we choose, in any camera or post processing software, changes the color balance in our pictures, making it warmer or cooler depending on what sort of light temperature we're shooting in.
The simplest option to get best White Balance setting is to put it on Auto Mode. While, the camera's White Balance presets give us more control over color.
The color of the light effects the color of our photographs. Sometimes it's not possible to notice this change with our naked eyes because our minds adapt very quickly to perceive the color of the light as neutral, even if it's not. That's why pictures taken at dusk or dawn have a cold, blue look, and pictures taken under household lighting have a warm, orange color tint.
DSLRs have settings to control 'White Balance' and set the color shifts. It happens when the camera processes and saves our pictures. For example, if we take a picture under broad day lighting, the camera can reduce the amount of blue in the colors and boost the orange to produce more neutral colors.
Which one is better - Auto or Manual ?
Choosing the Auto White Balance mode is the most easiest option. Earlier, it was not much of a good choice, but over the years Auto White Balance systems in cameras are improved and the results we get now are certainly much better than they were in the early days.
But Auto mode can't be trusted always. It may fail to correct certain kinds of lighting strongly. This happens when we are shooting with artificial lighting, which may still produce a warm color cast even with auto White Balance switched on. At the time of sunsets or landscapes, sometimes auto White Balance corrects color casts itself even if we don't want it to.
This is why nowadays almost all DSLRs come with White Balance 'presets'. These are tuned to provide a fixed correction for common lighting scenarios such as Daylight, Flash light, or Dusk. The camera relies on us to choose the right setting for the scene.
These presets gives us more control over the White Balance, and hence we get better results.