READ: Camera Modes
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Macro Mode

Take a look at the picture of the leaf. Notice that the large water droplet is in focus but by the time you get to the edges of the leaf it starts getting blurry? That is what the Macro setting does - it will only focus on a small portion of the subject. For reference, this leaf is only about 1 inch long and less than 1/2 an inch wide.
Try it out. Go find some small things to photograph and see what they look like when you use this setting.