Stabilization is most useful for video and low-light situations.
Digital cameras commonly have an image stabilization feature. Some have "optical" stabilization while others have "digital" stabilization, but they don't explain the difference. Basically, optical stabilization alters a physical piece of the camera to keep the subject steady. Digital stabilization compromises some aspects of the image to stabilize it, which results in reduced quality compared to an optically stabilized image. There are two common types of both stabilization systems.
Lens Stabilization
Lens stabilization is a version of optical stabilization. In this method, a glass segment of the actual lens is moved to counteract accidental camera shake. The glass segment will consistently move in a direction that will bend the light rays toward the camera sensor, resulting in a "smoother" image. There is no alteration to the actual image captured.
Sensor Stabilzation
Sensor stabilization is another version of optical stabilization. In this method, the camera sensor itself is moved to keep light rays hitting it. The result is very similar to lens stabilization, and since this stabilization is built into the sensor itself, any lens can be used. There is no alteration to the actual image captured.
Digital Cropping
Digital cropping is a version of digital stabilization. In this mode, the camera will cut away a border from the image and use it as a "buffer" zone. As the camera moves, the camera will move the frame into this buffer zone to stabilize the image. While this may be as successful as optical optimization, this method typically results in a lower image resolution due to the pixels required to create the buffer zone.
Digital Processing
Digital processing is the least desirable version of stabilization, and alters the image information to create the appearance of stabilization. In some forms, it will apply a sharpening effect, which may reduce blur but will also increase the amount of noise in the image. Another method is to increase the brightness of the image to increase the shutter speed, which will also increase the noise of an image.
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