Available as one of the many displays on the back of your camera, the histogram is a visual representation of the distribution of light and dark elements in your photo. The left side of the histogram represent black and the right side represent white. It is a fabulous tool to help you get 'correct' exposures everytime, even if you are shooting in 'auto' mode.
The camera's light meter measures the light coming into the camera. However, if a certain parts of the scene being photographed are very bright or very dark, the camera adjusts the exposure because it believes that the scene is brighter or darker than it actually is. This results in an under or over exposed image.
Correct exposure is usually determined by all values in the histogram appearing within the left and right hand axis.
As can be seen from these two examples, the shape of the histogram can vary significantly. This simply demonstrates the distribution of brightness and darkness within the image.
The left side of the histogram is right up against the left axis. This is showing that some of the dark areas are fully black and will contain no detail at all.
In this image it is acceptable as it was intended to have the walkers silhouted against the sky. It was important to have the sky properly exposed though and this can be seen as the right hand side of the chart is within the boundaries of the histogram.
The white clouds dominate this scene and also the exposure. There is very clear clipping of the hightlights seen to the right of the histogram
This image would be difficult to recover in image editing software due to this loss of data and if printed the highlights would be paper-base white.
'Shooting to the Right'
It is often recommended that when shooting in RAW, that you should set your exposure such that the histogram is pushed as much as possible to the right, without causing the highlights to be clipped. The reason for this is that more data is stored in binary (ie in computer bits) in this part of the histogram than to the left. This gives more detail, less 'noise' and more opportunity for processing the image afterwards.
However, you must be mindful of what you want to achieve. By shooting to the right you are potentially sacrificing detail in the shadows which may be an important part of the image that you are trying to capture. You should also be mindful that the in-camera histogram only represents the small 8 bit preview image you see on the rear of your camera. Therefore, if you push your histogram too far to the right you may only see the highlight clipping for the first time when you open your file in its RAW state.
The histogram is an invaluable tool which I use all the time. I find it of particular use on my Panasonic compact camera where I have less control over the exposure than my DSLR and I can assess whether the camera has been successful in obtaining a good exposure.
Relying on the screen on the back of your camera to determine whether you have a good exposure or not is simply not enough. Switch on the histogram and be sure of your exposure every time.