Wikipedia:
The camera obscura (Latin for "dark room"; "darkened chamber") is an optical device that projects an image of its surroundings on a screen. It is used in drawing and for entertainment, and was one of the inventions that led to photography. The device consists of a box or room with a hole in one side. Light from an external scene passes through the hole and strikes a surface inside where it is reproduced, upside-down, but with color and perspective preserved. The image can be projected onto paper, and can then be traced to produce a highly accurate representation.
Using mirrors, as in the 18th century overhead version (illustrated in the Discovery and Origins section below), it is possible to project a right-side-up image. Another more portable type is a box with an angled mirror projecting onto tracing paper placed on the glass top, the image being upright as viewed from the back.
As a pinhole is made smaller, the image gets sharper, but the projected image becomes dimmer. With too small a pinhole the sharpness again becomes worse due to diffraction. Some practical camera obscuras use a lens rather than a pinhole because it allows a larger aperture, giving a usable brightness while maintaining focus. (See pinhole camera for construction information.)
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