Most digital cameras feature built-in noise reduction strategies, as Matt explains in his noise reduction guide...
A number of people have written in to ask what we mean when we state that a camera has ‘aggressive noise reduction’. One example is the Panasonic TZ3, when we said that ‘images taken at ISO 100 have a texture to them and at higher ISO settings, noise reduction begins to smear detail as it eliminates colour noise.’
Essentially, what the camera is doing is trying to remove the noise it knows it has created. This is a result of the signal being amplified to a level at which it can be processed, which is necessary at higher sensitivities as there is less light (and therefore less information) reaching the sensor. As part of JPEG processing, a camera will automatically try and remove noise to give you an image that’s ready for printing, displaying etc. The downside to this is that as a camera can’t accurately remove all of its noise, the process also compromises fine detail as it attempts to smooth out the image. Different cameras manage noise reduction with different degrees of success, and sometimes it can be a little overzealous.
Many DSLRs now come equipped with the option of removing noise reduction for images taken at higher sensitivities. By deactivating this, it allows you to post process noise from your images at a later stage, where you have a greater degree of control and can see exactly what changes you make and how they affect the image as a whole. This can either be done through a program such as Photoshop or a dedicated package. Shooting in Raw will also give you the opportunity to remove your own noise, and is recommended for when you need the utmost control over your images.