Sony D-Range Optimizer

It optimizes the dynamic range ( = the difference between the darkest parts and the brightest parts) in a shot. Sometimes the dynamic range is too great for the camera to capture, or at least to capture well. This means you can have either detail in the highlights, but with the shadows too dark to see detail, or you can have shadows with detail and have highlights that are blown out (all white).

Dynamic range expansion / optimization modes are one way of making sure you can see detail in both the highlights and the shadows. They do this by underexposing the image, to make sure that the highlights are not blown out (because once that happens, they can't be recovered). Then, using software, the shadows (which are too dark as a result of the underexposure) are brightened back up, so that they show detail again (shadows are easier to "save" than highlights).

Because the brightening of the shadows leads to more noise than one would expect given the ISO value that was used, cameras often label the ISO higher than they actually used when you're using DRO / dynamic range expansion.

Another way to increase the dynamic range would be HDR (high dynamic range), which consists of taking multiple shots at different exposures, and then combining the shadows from the brighter shot with the highlights of the darker shot. It can be done right, but when used too liberally, it can go horribly wrong ;)
 
thx bartjeej - it sounds like it only affects jpg's then (?)

also it does differentially process different parts of the image(?)
 
thx bartjeej - it sounds like it only affects jpg's then (?)
yes and no. The raw file will simply be underexposed, and by raising the shadows yourself in the raw converter you can achieve the same basic result (depending on how advanced the DRO and the raw converter are). If you use the raw converter that was supplied with the camera, that program will often do the DRO automatically, but for instance Lightroom doesn't (at least not for the cameras I have), so I have to do it manually.

also it does differentially process different parts of the image(?)
Yes - the darker parts of the image are brightened, while the bright parts are left alone because they're "just right" at the lower exposure setting (if all went well ofcourse ;) ). The mid exposure parts are affected at some intermediary level.
 
True HDR modes require 2 or more exposures which are then merged. That makes them unsuited for scenes with (quick) movement in them, as objects in the scene will have moved between the 2 exposures, which often leads to double images or ghost images.

DRO and similar dynamic range optimizers work from a single exposure, so they can be used for all kinds of scenes, including those with quick movement. Using it shouldn't slow the camera down.

Some people prefer to only turn it on when they feel it's absolutely necessary, and people who shoot raw often don't bother with it at all since it doesn't really affect the raw files in any way you can't do for yourself.
Personally, I have my Fuji on "auto", where the camera decides whether or not to apply DRO based on the contrast in the scene. Most of the time, it chooses a DRO mode and intensity I agree with (sometimes I'd like it to be more agressive). I shoot raw + jpeg, so if DRO isn't enough to save the shot, I still have the raw file to work on - but I hardly ever need it.
 
Good detailed explanation Bart. I used the RX100 (1st gen) for a while, and I found that if I turned off DRO, the metering was quite happy blowing out highlights and favouring details in the shadows, to where it was impossible to recover highlights from raw.

I just learned to leave it on, and deal with underexposed raw files in LR.
 
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