Why Use HDRI Panoramas?

Most 3D rendering programs these days support ambient occlusion and/or radiosity. When you use either, you can use a HDRI panorama not just for background, but also for lighting.

Normal light sources create the typical "computer render" look that we all know. Below is an example of an image that was rendered using a directional light source and some ambient light, the old approach to rendering:

The hard shadows and bright surfaces are typical of computer renderings. The direction of the light also does not perfectly fit the background, and the building does not really seem to be part of its environment, does it?

I have rendered the same scene again, this time using ambient occlusion and HDRI lighting derived from the same panorama that is used as the background image:

You should notice two differences between the images. One, the lighting in the second image is a lot softer and fits better to the environment. You will probably not notice that light colouring is also derived from the HDRI panorama, but you might notice that the lighting perfectly fits the environment now - in the first image, the rightmost side of the building appears in shadow even though it is clearly bright at that side.

HDRI lighting gives your renders a more realistic look, automatically fitted to the background, and did I mention it throws in soft shadows as well? And all of that without hours of setting up light sources. Here is a series of shots of the same building as above. The only thing that was changed inbetween renders was the HDRI panorama. As you can see, lighting derived from the HDRI panorama also means automatic adaptation: