There are two different "camera following" modes. The camera following mode controls which direction the virtual "eye" or "camera" is aimed, to render the three dimensional scene including the helicopter. These modes have no effect on the flight of the helicopter, but do affect the perception or appearance of flight in some situations.
Normal camera following
In this mode, the camera is always pointed directly at the helicopter. The helicopter will always be exactly in the center of the screen. In sudden motions, the background will move around, but the helicopter will remain centered. This mode conceals the helicopters sudden movements to some degree. The pilot is focused on the helicopter which remains solid in the center of the screen, and the motions of the background are subconciously filtered out. Collective pitch changes will appear to be more "mushy". Abrupt motions in any direction will seem less dramatic in this mode. However, slow gentle motions will appear less jumpy in this mode. Normal camera following is recommended for learning basic flight skills.
Smooth camera following
In this mode, the camera is generally pointed at the helicopter, but rate of motion of the view point is limited. During sudden motions, the background will remain relatively stable and the helicopter will move around somewhat on the screen. This mode emphasizes the helicopters sudden movements. Collective pitch will appear to have more "pop". Abrupt motions in any direction will show up more clearly. Smooth camera following is recommended for doing advanced aerobatics, where you want the sensation of extreme power with collective pitch changes.