Kerning is a generic word for adjusting the letter-spacing or "tracking" on a letter-by-letter basis - it does not refer to any specific process by which to do so. It can refer to either:
- pre-defined kerning or kern pairs, where kerning information is embedded in the font;
- automatic kerning, where the text is automatically kerned by computer but not by getting kerning information from the font;
- manual kerning, where the designer does the adjustments himself by dragging letters left and right.
The first one is the one you probably want to know more about.
Digital fonts can contain kerning information. In fact, many of the common ones do. This information specifies how much additional space to be added or subtracted between certain letters. For example, a font may specify -80 units of kerning between "W" and "e", which means these letters should be moved closer to each other by 80 units than they otherwise would be just according to the defined width of the letters.
Times New Roman, for example, contains kerning information. Georgia, notably, doesn't - it was designed to display as well as possible on systems that don't support kerning (such as web browsers, at the time).
In most contexts in a typical operating system, the kerning information in fonts is ignored, and the letters are spaced according only to the width of the letter as defined in the font. With some fonts, this may make some letter pairs, such as "We" or "AV" to appear closer or further apart than you might want in an ideal case. It is possible, however, to turn on "kerning" options in many applications, such as word processing and even (nowadays) on websites using CSS. This instructs the font renderer to look in the font for kerning information and apply it. If the font doesn't contain kerning information, then no kerning will be used - applications/font renderers do not usually try and apply automatic kerning, which doesn't lend itself well to automation.
Some applications such as word processors might decide to apply kerning only when displaying a font at a certain minimum size or greater, effectively preventing kerning from being applied to normal body text. This is probably done for on-screen readability (there are a number of compromises that must be made when displaying text legibly at small sizes on a screen) and/or performance reasons. For best results, it should usually be enabled for print, even for body text.