That's one hell of a well-drawn toad.
From here, where the comments had this interesting post on why you see lensflare in computer games:
To get slightly technical: the problem video games in particular and computer graphics in general have with strong light sources and bright objects is that they’re basically impossible to do realistically on a computer. Your monitor does 256 levels of intensity for a given color (okay, not strictly true, but close enough) and the contrast ratio from pitch black to pure white on it is on the order of 1:1000. In reality that’s about the difference in intensity between a white object in direct sunlight and a white under the table in a sunlit room. Your monitor also has a max brightness roughly equivalent to a well lamplit wall, which is a very far cry from the brightness of looking directly into the sun.
This has a bunch of annoying consequences for how you need to approach lighting. You can’t just say that “well, the blackest thing we have in our game will be as black as the monitor gets, and the whitest thing will be as white as it gets” since if you do you’ll completely lose all details in dark or bright areas. You also fundamentally cannot do bright objects the way reality does since the pixels just can’t get sufficiently bright (or sufficiently dark, but that’s usually less of a problem).
If we can’t be realistic about bright lights and we still want to have games convince the player that it’s outside and daylight, well, the only available choice is to somehow cheat. To fool the viewer into thinking a pixel that’s actually as bright as an egg white is instead as bright as the sun, even though it’s emphatically nowhere near. Knowledge of how the eye works actually does help here: bloom works as a brightness trick specifically because of how the retina encodes visual information (which leads to overbleed). Similarly having the sun give off a lens flare in an FPS, even though it’s biologically nutty and everyone involved knows it, is a pretty successful method for making the viewer believe that the sun drawn on the screen is much brighter than the clouds next to it even though their pixels are the same color.
Obviously you can go overboard on bloom, lens flares, tone mapping and all the other methods used to trick the viewer, to the point where bright objects look less convincing instead of more. Using some of it is still a huge improvement and having the lens flare look like real lens flare instead of drawing some transparent circles in the right places and calling it a day helps with keeping up the illusion.
Original post on Dreamwidth - there are comments there.