The term “camera obscura” is Latin. “Camera” means a vaulted chamber/room and “obscura” means dark. So the phrase translates as “darkened chamber/room.” It is an optical technique that uses a darkened room with a small hole to the outside. The hole acts like a lens and projects an image of what is in front of the room inside the room. It does not have to be a room. A box will also work. Artists used the technique to project an image on paper and trace a very accurate version of the image.
As the pinhole is made smaller, the image gets sharper, but it also gets darker. There is a point at which the hole gets too small and the image blurs.
The camera obscura is one of the inventions that led to photography. The pinhole camera, for instance, is a direct descendant of the camera obscura. It is easy to make one out of cardboard box that can be made light tight. A small, round pinhole is made which will project the image of the outside world onto the back of the cardboard box. Unexposed film is set on the back of the box where the image will appear. This must be done in a completely dark room.
A sliding film holder or back is ideal because the distance between the film and the pinhole can be adjusted. This distance from pinhole to film changes the view from wide angle to telephoto. It also changes the effective f-stop ratio of the camera. Moving the film closer to the pinhole will result in a wide angle field of view and a shorter exposure time. Moving the film farther away from the pinhole will result in a telephoto or narrow angle view and a longer exposure time.
Heavy tape or other means of cover must cover the pinhole until an exposure is desired. While the depth of field is infinite, there is still some optical blurring.
You can calculate the f-stop of the pinhole and determine the the length of exposure by using a formula which is explained at Wikipedia’s article about pinhole cameras.
A camera obscura can occur in nature. One example is a tree which blocks light from the ground with a small aperture which allows light to pass to the ground where an image of the sky may be seen. A cave can also sometimes provide a natural camera obscura.
NASA has funded research of a project which plans to use a pinhole camera with a diameter of 10 m and focus length of 200,000 km to image earth sized planets in other star systems.