The new Portrait mode in iOS 10 gives your pictures a depth of field that the regular Photo mode doesn't. As with a camera that has an adjustable aperture, Portrait mode focuses on the person or object in the foreground and slightly blurs out the background.
You'll find this feature only on the iPhone 7 Plus because it requires both 12 megapixel cameras. One camera is a wide-angle ƒ/1.8 aperture and the other is a telephoto ƒ/2.8 aperture.
To use the feature, start up the Camera app and slide the mode selector on bottom to Portrait. The first time you do this, it will tell you that the feature is still in beta, so your results may vary.
An indicator on bottom will tell you if you need to move the phone closer or farther away from the subject, and will also tell you if you need more light. As with the regular camera modes, you can tap the subject on the screen and flick upwards to brighten it. When the depth effect turns on, you'll see the indicator on bottom.
Here is the same shot using the regular Photo mode on the left, and the Portrait mode on the right.
When you go into the Photos app on your Mac, you'll see a depth effect label on any picture that's using it. You won't see the labels in the Photos app on your iPhone. So how does it work? The image you see on the screen is from the telephoto lens. Simultaneously, the wide angle lens measures the difference between what it sees and what the telephoto lens sees, and creates a 9-point depth map. The camera's software uses that map to create an artificial depth of field, blurring the background. This is why Portrait mode doesn't allow you to zoom in or out. If you pinch or spread your fingers on the screen, nothing happens.
If your eyes are sharp and you look closely, you'll see the effect is a little less than the quality of the depth of field you'll get with a good SLR. That's because on a regular camera, you get this effect with one lens that's bigger. The wider the aperture (lower numbers), the more pronounced the effect will be. But that isn't to dismiss what Apple has done, and we can expect the feature to improve in later updates.