When you set any of the Adobe apps to Optical it partly or maybe completely ignores kerning/spacing in the font, and spaces it optically. With Metric selected the app uses the spacing and kerning of the font. At least that's what I thought it did. :)

Optical kerning doesn’t work well enough to use. Leave it off at all times.

Wow I allways thought that Optical is the best option when working with text in indesign or illustrator...
so Optical is how the font looks like without any feature in fontlab? is the way I put my glyphs?

so Optical is how the font looks like without any feature in fontlab
No, optical kerning is kerned how the optical kerning algorithm thinks it should be kerned. But it doesn’t kern well enough to not require manual intervention, which sort of negates the point of using it. And it can be a disaster at text sizes.

Re what optical spacing does and why to leave it off (most of all for text), there's some in-depth discussion and analysis in this thread:
http://typophile.com/node/54310
(start reading from about Feb 5)

Well to my experience, optical kerning works wonderfully with Adobe 'originals' (e.g. Arno Pro, Chaparral, Adobe Garamond Premier, etc.). With other typefaces it depends. Sometimes you get satisfactory results, while with some others you'll have the kerning going absolutely bananas. I have to confess that I mostly use metrics kerning, and trust the type designer's judgement more than the application's algorithms.

Cool - thanks guys!

I've only ever used Optical for really large text. Or if I'm testing a typeface that does not (yet) have kerning. Then it can be a quick fix for testing purposes. But as James already said, it often requires manual intervention.

When I read that you were getting overlaps I started to wonder if that you are using too much kerning as opposed to careful sidebearings to get a good fit in your font.

I don't think Optical spacing will produce overlaps by itself, if anything, it wants to make sure letters never touch at all (like serifs between r and w), even where this would in some cases be desirable for better spacing.

Maybe I should explain why I thought there were (maybe) problems with the side bearings. If you do all you spacing via kerning rather than side bearings and let your shapes go past the side bearings, that might overwhelm the logic of the optical spacing mechanism.

In general, i prefer optical (= Indesigns interpretation) to metrics, if the font I use is badly spaced/kerned. With "good" fonts, I usually trust the type designer (metrics setting).

And I like the optical setting for adjusting numbers of font that have only tabular figures. Optical always looks better then than metrics if used in text environment instead of tables.

mikej: to turn off kerning completely (neither indesigs interpretation nor font designers kerning) you have to enter a 0 (zero) to the field. Then you get plain metrics without kerning.

Nice - thanks Sebastian!

this is my opinion only:

Metric: if you respect the typeface designers ability to get it right which mostly I do when I get a typeface from a respectable foundry... if however it is some what of a 'type designer in training' then a bit of manual kerning is required especially on headlines.

Optical: for numeral (numbers) as on some typefaces seem to be a little out... Trade Gothic is a classic for the numerals being a little whack in my opinion.

If you're using a font with poor kerning values (or none at all), the Optical setting can help, especially at larger sizes.

Otherwise, trust the Metrics setting, and adjust tracking as needed.

And never use "optical" for connecting scripts.

The November/December 2008 issue of Step Inside Design had an article that included samples of House Industries' Studio Script collection. The spacing was completely messed up. I could be wrong, but my guess is that they used InDesign with "optical" spacing enabled. There's no way it was the built-in metrics. The letters didn't even connect properly.