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Dynamic range is the range from brightest to darkest visible area of an image. The human eye can see brighter and darker areas than can be captured on a sensor, but the more dynamic range a sensor is capable of capturing, the greater the range that will be represented in the image.
Sensors with more dynamic range provide greater latitude for shadow and highlight recovery.
The fact that a camera can’t capture everything that a human eye can process in one shot has paved the way for High Dynamic Range photography - a popular technique that involves the combination of multiple images which are each properly exposed for different portions of a scene.