Lighting
Lighting in the 3D world is vital. It determines how objects react to the light. For example, we can more clearly make out the shapes of objects by the light, and even get a rough idea of the material of an object, by seeing how it reflects light. A rough object might not cast much light off of its surface, while a smooth object would reflect more light. Also, a metallic object would be easier to distinguish by the telltale reflections and highlights that it casts.
In addition to proper shading, lighting can really make 3D environments life-like and dynamic. There are several attributes of lighting and how they affect objects:
Ambient lighting
The ambient aspect of lighting deals with the fact that your object is lit, but you don't exactly know the source of the light. This is a trait when light is reflected off of another object onto the object that you are viewing.
Diffuse lighting
This trait shows that the object that you are viewing is lit from a certain direction, and you know which direction the light source is coming from. The object will be lit no matter where you look. Thus, diffuse lighting does not require knowing where the viewer is. An example would be like the sun being at a certain position in the sky, shining down on a tree, for example. The theory behind diffuse lighting is that the amount of light that a surface receives is directly proportional to the angle at which the light hits the surface at. The highest instance would be if the light source is at a perfect 90 degree angle with the surface.
Specular lighting
Also called shininess, the specularity factor illustrates reflection of the surface of the object that you are viewing, which is caused by light hitting the object at a certain angle. Specularity causes the viewer to see a white highlight on the object, because the light is reflected towards the viewer. Specular lighting requires knowing where the viewer is, because the highlights must be illustrated appropriately.
Color
This one is probably the easiest to understand. Colored lighting causes changes in the hue of the object, depending on the color of the light, and the color of the object.