A sharp image is the result of the camera lens accurately focusing the subject at the focal plane of the camera.
A poor lens can never produce a sharp image. Other forms of image degradation are improper focus, camera motion and subject motion. These are problems that the Photoshop Sharpen Filter can not fix.
If the lens does not produce a sharp image, the information does not exist and Photoshop cannot create it. Keep in mind that a soft, misty image can be quite dramatic and desirable. Photographers who shoot glamor pictures will often put a screen mesh filter over the lens to soften things up.
Digital camera resolution.
The number of pixels on the image sensor. Generally it determines how big the photograph can ultimately be, without being able to see individual pixels. Pixels in the traditional sense do not play a role in determining a picture's sharpness.
The number of ink dots that a printer can disperse on to paper. Measured in dots per inch (dpi). The greater the number of dots and the smaller the dots of ink are, the better the printer is able to reproduce colors, tonal gradations, and fine detail.
Resolution is the most familiar of the two perceptual factors contributing to sharpness. The traditional measure of image sharpness is stated in line pairs per millimeter abbreviated as lp/mm. In other words the ability of the human eye to discern the number of high-contrast pairs of lines appearing in the space of a single millimeter.
For a finished photograph to be considered sharp, only 5 lines per millimeter is required.
Acutance is the less understood characteristic of sharpness. Acutance isn't about resolving detail, it's about the transition between edges. In other words when an edge changes from one brightness level to another.
This is what Sharpening in photoshop is all about. Scanning and digital capture softens acutance and so we apply a (ill-named) process called an Unsharp Mask to increase edge sharpness back to what it should be. Remember, this has nothing to do with resolution, the other aspect of sharpness.
The Photoshop Sharpen Filter should really be called the Photoshop Acutance Filter.
As you work on a photograph, Photoshop is constantly calculating and assigning new values to each pixel. In the process small errors can creep in and the usual result is a softening of edge contrast (acutance). The Sharpen Filter is meant to correct this situation.
As a result the Sharpen Filter should be applied as one of the last steps in the editing process. In most cases it will be the final step. There are times when applying the sharpen filter, undesirable artifacts appear that will need to be cleaned up.
Sharpening is an accumulative process. Apply it once, get some sharpening, apply it a second time get more sharpening, a third time more still, etc. I have read that applying Sharpening in small incremental steps is a better method then trying to apply it all a once. It is also faster and easier.
If I am working on a small image, I will sharpen once. On a larger image, I will sharpen two or more times, as needed.
It is difficult to tell when you have enough sharpening. It is not difficult to see when you have too much. Therefore you can keep sharpening until you have gone to far, then backup with the undo command or in the history palette, until you find what looks best.
How much sharpening? There is no clear cut answer. Several factors are involved.
The image content, most pictures will not look natural if over sharpened. Others can be very dramatic with liberal use of the sharpen filter.
Resolution (pixel resolution), high resolution pictures will generally require more sharpening then low resolution pictures.
Intended output, pictures destined to be viewed on a monitor will require less sharpening then pictures that are to be printed.
Finally, the personal preference of the photographer: everybody has their own preferences.
Sharpen, is a preset and will apply a certain amount of sharpening to the entire image.
Sharpen More, will apply more sharpening than Sharpen.
Sharpen Edges, this filter will sharpen the edges of the image leaving the rest alone. This would be the filter to use if you have noise in your image. Or perhaps you don't want to sharpen a person's face.
You can also restrict, or enhance sharpening by using selections.
Unsharp Mask, allows you to apply the exact amount of sharpening you require.
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Amount, determines how much contrast is applied. The higher the number (%) the greater the contrast. Generally you will work within a range of 50% to 150%.
Radius, determines how large an area is affected. Changing the radius has the most dramatic effect of all the sliders.
Threshold, determines how much difference is necessary before sharpening is applied. Zero threshold, every pixel is recalculated. Generally you will be working with fairly low numbers, 0 to 10 levels or so.
The Unsharp Mask has another useful feature in that it can enhance local contrast rather nicely. Instead of using a relative high Amount number(%) and a low Radius, you reverse the process and use a low Amount and a high Radius. The results are quite pleasing.
For my purposes, I have found that Sharpen and Sharpen More provides too much sharpening.
I use the Unsharp Mask with the following setting.
Amount - 100%
Radius - 0.3 pixels
Threshold - 0 levels
For me, sharpening incrementally is logical, visually easier and faster.
Photoshop, like most computer software, gives you 15 different ways to accomplish a task. The goal is to find a method that works well and consistently for you.