RAW image taken with Flash
White balancing your camera means selecting the dominant light source (color temperature) in which you are shooting. As in Incandescent (tungsten) light bulbs, Flourescent, Sunlight, or Outdoor Shade.
This is so that colors in your photograph look realistic and natural.
If your camera is set to automatic your camera will make these adjustments for you. If you are shooting in Manual mode, then you will want to tell your camera what color temperature you are shooting in.
The color of sunlight changes through out the day. It is warmer (more red) at dusk and dawn and cooler (more blue) at midday.
Light from a light bulb has less blue and more yellow and red than daylight.
You can see this when you turn on a lamp in a room lit by daylight. The light from the lamp will look yellow against the more prominent daylight.
However, if you see the same lamp at night, with no other lightsource the light will appear more white and not yellow.
The color temperature of light is measured in Kelvin degrees or just K.
An ordinary lightbulb has a Kelvin temperature of about 2800K (it has less blue and more yellow than ordinary daylight)
Daylight has a color temperature of around 5000K
If you are shooting in RAW you can set the white balance choice when you edit the file (ie Photoshop) because in digital cameras White Balance is applied to the RAW file after the image is captured.
If you are shooting in JPEG or TIFF white balancing is applied by the camera.