There are various 3D environments which you can use as a background for your character with a selection of props and accessories, as well as a range of pre-set lighting effects and some nice 3D particle effects for things like smoke, fire and rain. There are also various pre-set camera positions and movements.
Where the digital photography comes in is the ability to import photographs into the program and use them as facial textures for your 3D character. However since there is no way to adjust the 3D facial modelling of the character, any resemblance between your avatar and yourself will be somewhat limited.
iClone 2 Studio is a fun program to play around with, and with patience it is possible to create short animated movies and 3D scenes, which can be used for a variety of purposes. The results are better than you’d expect from a relatively low-cost program, but don’t think you’re going to be creating the next Shrek film on it. If you need better quality character animation, a wider range of posing control and a lot more available content you’ll be better off saving up for Poser 7.