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On compact cameras, this mode allows the camera to focus closer than normal. On SLR cameras this mode will select a large aperture to blur the background to help isolate your subject.
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A focusing mode on many cameras and lenses that allows close up pictures of subjects to be taken with a range of 20cm or less. Digital compact cameras are particularly suited to macro work because they have such short focal lengths. Many models can focus as close as 1cm.