A
traditional LCD panel requires a
backlight for the
image to be viewable. This poses problems in
sunlight when the backlight is not
intense enough causing the image to become
washed out. In fact, the problem is so bad, that most LCD panels are not usable in sunlight.
A hybrid LCD panel overcomes this problem by making the panel semi-reflective. In bright sunlight, the backlight can be turned off, an the reflection of sunlight off the panel used instead to display the image. At night, the traditional backlight is used to illuminate the image.
One example of hybrid LCD panels can be found on the Sony CyberShot F505V digital camera. By using the hybrid LCD panel, Sony have removed one of the complaints about LCD panels on digital cameras - that is, they are useless outdoors.
However, despite the advances in LCD technology, they still aren't perfect. In bright sunlight, the reflective nature of the panel works incredibly well and in dark conditions, the backlight also works well. However, there is an intermediate brightness level (eg an overcast day), where it isn't dark enough for the backlight, but not bright enough for the reflective nature of the LCD to be effective. In those conditions, it is very difficult to make out an image on the panel.