

Neutral density filters are primarily used for balancing exposures. By balancing exposure, I mean adjusting the amount of light that enters the lens so that the scene appears uniformly lit across the frame and every inch of it is exposed properly. A properly balanced image will show a histogram that is clustered more towards the middle of the graph. Too much on the right and you have an over-exposed image and too much on the left means you have under-exposed.
Technically speaking, an under-exposed image is better than an over-exposed one, because you would still be able to salvage some details from an under-exposed image. You would need to shoot in RAW for that. However, getting the exposure correct in-camera is the best option by far.
The reason these filters are called as neutral is because they stop light across the spectrum equally, without any bias. Consider them as shades for your camera lens.
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