Daylight setting - as the picture would appear if taken on standard film.
Custom white balance - the background is now white and the colours are more natural.
Different lights have different colours - even sun-light is different colours at different times of day. The reason you might not have noticed is that our eyes are very good at adjusting. Different coloured light can do strange things to coloured objects - if you have orange streetlamps in your street, go out when it's dark and look at what colours the cars are!
Traditional film is is less flexible than our eyes and is made for taking pictures outside, and is designed so that pictures look natural when taken in daylight. If you've had a film camera, you might have noticed that pictures taken indoors without a flash can look strange. Those taken under tradition bulbs will have an orange/yellow tint, and those take under a fluorescent light will look greener than you remember. That's because these types of light aren't the same colour as sunlight.
One of the good things about digital cameras is that you can adjust the white balance - this means that you can filter out the colour of the light to make white things white again. You can take pictures indoors - or indeed anywhere - without worrying that they'll come out a strange colour, or having to buy expensive studio lights.
All cameras have an automatic setting, but they can get it wrong, so most allow you to set the white balance yourself, either by choosing from a list with options such as daylight, shade, tungsten, fluorescent, or by using a custom white balance. The custom setting usually allows you to take a picture of something white (I keep a piece of paper in my camera bag) and then the camera sets itself to remove the colour cast.
The two pictures below show the same subject taken with two different white balance settings. The conker was lit with a desk-lamp containing a standard tungsten bulb. The top picture uses the "Daylight" setting and had a yellow/brown tint. This is what the picture would have looked like if it was taken on standard 35mm film.
In the second picture I have set the white balance to Custom and taken a picture of the background on its own. I then told the camera to "assume" that the background is white (which it is - it's a piece of A4 paper) and took the photo again. This time the background is white and the colours are more natural.