What is a pano and does a camera simply spit out the final product? Absolutely not. I have put together a short piece on a simple panorama--pano for short--I recently put together of Loon Point in Santa Barbara, California. Having the software to stitch a pano together is imperative (given you are shooting digital). I use Adobe's Photoshop CS5. There is other software out there but Photoshop does a remarkable job with this task and it does so much more. Other than the software, it's pretty seamless.
A pano is simply two or more images stitched together. In this case, it is three images. I took the above three images knowing I would later piece them together for a panorama. My camera was on a tripod. Remember to lock the focus so as not to have a different focal point in each shot. I choose to focus manually for most landscape panos. Also, lock in your exposure. Setting the camera to full manual mode helps eliminate the easy mistake of forgetting to lock the exposure. You generally don't want a different exposure for each image. Level the camera. I use a bubble level that fits in the camera hot shoe.
In the case above I used the Nikon 24 mm tilt/shift lens. You do not need a tilt/shift lens for panos. Using the shift function for a pano is pretty useful though and eliminates finding the lenses nodal point. For the sake of simplicity, we'll skip what tilt/shift lenses are and can do. Really Right Stuff has a great explanation on finding the nodal point of a given lens for making panos and explains what a nodal point is. Here is the Really Right Stuff link.
OK, after running the three images through photomerge in Photoshop CS5, I essentially got this. You want to select "flatten" in Photshop after generating a pano and possibly crop the image if there is "dead space" in the new pano. "Dead space" will show up if you have not leveled the camera properly and/or have not found the nodal point of the lens... Keep in mind, it is possible to fill in some dead space using "fill" and "content aware" in Photoshop CS5 and newer.
I do not edit any of the images until after generating and flattening the pano in Photoshop CS5.
All I did to the image above was make a basic levels adjustment and add a small amount of vibrancy.
My nearly final steps were dodging and burning in Photoshop CS5. I use a Bamboo Tablet by Wacom to essentially brush in where I would like to dodge and brush in where I'd like to burn. I generally set the strength slider in dodge or burn to 1% to gradually make the changes. I also slightly sharpened the image. That was it, until I showed this pano to my youngest son who is eight. He said, "Could you get rid of the seaweed on the sand? It's pretty distracting."
So here is the final version sans seaweed. I used the content aware eraser in Photoshop CS5 to very slowly erase the seaweed. I also used the Text component of Photoshop to add my watermark and then reduced the opacity of the text so that it doesn't stand out too much. That's it.