Image-based lighting is where an image is used to light a scene. In the real world, every object is lit not only by light sources like the sun, lamps, and so on, but also by everything around. Standing in the middle of a street, a person will be lit by the sun, the blue sky, the brown buildings and the gray street. Emulating this form of lighting clearly has the potential to create incredibly realistic images.
Images used in this lighting method are a special kind of image, called a High Dynamic Range Image or HDRI. This type of image has the capability of lighting a scene with incredible accuracy. In the Presenter window, an HDRI is wrapped around the scene as a sphere, and color and brightness from the HDRI are cast onto the 3D model to light it.
A model lit with normal lights
The same model lit with image-based lighting
You can see the difference this form of lighting can make to rendered images. And the enormous advantage here is that it is much easier to set up than traditional lighting.