This tool automatically makes a selection based on the brightness of adjacent pixels within a certain threshold. For example, if you click on a solid yellow circle placed within a larger blue one the selection will outline the yellow smaller circle. If you click on the blue circle the outline will appear round the blue circle and also round the yellow circle, that is, it will select the whole of the blue area and exclude the yellow area (rather like a ring doughnut).
Click on the Magic Wand tool on the Tools bar. The "Magic Wand" dialog allows you to set the threshold value between 0 and 255. The default value is 32. The threshold determines what range of pixels will be selected by the Magic Wand in relation to the original selected pixel. A value of 0 will result in only the adjacent pixels of exactly the same brightness being chosen. The higher the threshold value the greater the range of pixels selected, according to brightness. At 255 almost everything is guaranteed to be included in the selection.
Anti-aliasing is a technique for softening the edges of a selection by surrounding the edges of the selection with a one-pixel transition. You should nearly always leave the Anti-alias box checked.
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