Ambient light is an extremely important component of your photography toolkit. After all, the purely technical goal of photography is to capture the light falling on your camera's sensor.

In general, you want light falling on your subject to be soft and not harsh. You also want light falling on your subject to be at an angle and not direct. Direct light tends to be harsh.

Colors of Light

Light varies in color. While our eyes can compensate for that, cameras typically cannot. Colors of light can be used to express specific emotions generally associated with that color.

Morning light is warm
Dusk is warmer
Sunlight is warmest
Cloudy sky is cool
Shade is cooler
Indoor light is coolest
For best results you want your images, specially portraits to have a "warm" color.

Artificial Light

Artificial light is created using standard household lights or by using a flash. Since standard lighting is hard to control and is typically not bright enough, a flash is a valuable tool for controlling artificial light.

When using artificial light, keep the following in mind.

Bounced light is best
Light coming from behind the camera but from around 4pm or 8pm is very good
Light coming from 11am or 1pm from behind the subject can create interesting halos as in the photo above.

Light tips

Best light is at dawn followed shortly by dusk as the angled direction of sun's rays causes long shadows making the shot more real and interesting.
Light is particularly unfriendly at noon. It creates short shadows right below the subject.
Portraits shot at noon can be unflattering. Shadows are harsh and one side of the face will be too dark. Shadow of nose will throw strange dark patch on one cheek.
Noon has highest contrast (difference between brightest and lightest in an image) and you want a goldilocks contrast: not too high and not too low
At noon, take shots in the shade. See White Balance for more on this.
For creative, experimental or fun projects - break all rules above. Bad weather can lead to some very interesting compositions.