What is White Balance?
Have you ever wondered why the photographs you take indoors almost always look too yellow? Most indoor light sources produce yellow-colored light (tungsten, Figure 1). It doesn't at all look yellow to you because the human brain plays a big part in how we see (Figure 2). Your brain automatically senses the color of the light and adjusts so that white objects look white instead of yellow or blue.
Cameras try to do the same thing with the auto white balance setting (which is on by default with most cameras), but it’s not as good as the human eye. To complicate matters, indoor photos almost always require flash to produce a proper exposure without blur. The flash is white light (daylight balanced), which conflicts with the yellow (tungsten balanced) light sources in the room.
The camera must decide either to, (1) to overpower the tungsten light by using a flash at full power. However, a powerful flash may create unwanted side effects, like ugly shadows or red-eye. Or (2) reduce the flash output to supplement the exposure of the ambient light. More often, a mixture of low power flash and ambient light is an interesting solution.
A better solution is to balance the flash to the ambient tungsten light in the room. Manually set your camera’s white balance to “tungsten”. If the room light is tungsten, everything illuminated by the flash will appear blue. Cover the flash with a tungsten gel (a thin piece of transparent tungsten plastic). The daylight flash is now a tungsten flash, matching the ambient room light. The camera can't do this for you automatically. It’s not as smart as you.