Flat shading is lighting technique normal and the direction of the light source, their respective colors and the intensity of the light source. It is usually used for high speed rendering where more advanced shading techniques are too computationally expensive.
The disadvantage of flat shading is that it gives low-polygon models a faceted look. Sometimes this look can be advantageous though, such as in modeling boxy objects. Artists sometimes use flat shading to look at the polygons of a solid model they are creating. More advanced and realistic lighting and shading techniques include Gouraud shading and Phong shading
See also: computer graphics