This article was written by Andrew S Gibson, the author of Understanding Lenses: Part I, and is the third in a series of lessons about camera lenses. Links to the others are at the bottom of the article.
If direct sunlight (or light from another source such as a street lamp) hits the front element of your lens, you will almost certainly get flare.
There are two types of flare. One is specular flare; circular blobs or streaks of light across the frame. You can see specular flare in the photo below.
The other is veiling flare, where light creeps into the shadow areas of your photo, reducing contrast in the darkest tones and decreasing sharpness and definition. This is more subtle and not always as noticeable as specular flare. An example where you might see veiling flare is in a portrait backlit by the sun. The opening photo to this article contains veiling flare.
Quick tip: Using the auto-levels or auto-contrast functions in Photoshop helps compensate for lack of contrast caused by veiling flare.
Flare is caused by direct light hitting the front of the lens (this is called