Indeed. That is “recirculate air,” if it is off, air from outside the car is used when you turn on the vents. When it is on, air from inside the car is used.
If it is cold or hot out and you are running the heater or AC, recirculating air can be advisable because the outside air needs more heating or cooling to reach your desired temp while the inside air that has already passed through the heater/AC is usually closer to the desired temp so takes less to maintain that temp.
If you are driving somewhere with bad odors like near certain crop fields, large cattle ranches, sewers, industrial plants etc. you might recirculate to help keep the odors out.
If an odor is from inside the car like a fart or a baby pooping or a food/drink spill etc. you may want outside air so turn the recirc off generally.
If you are using ambient air- you aren’t using heat or AC and are just enjoying the outside air temp but don’t want the windows down because of noise or gust, you can leave recirculate off so the air doesn’t get stagnant.
Most modern cars have cabin air filters that can help reduce outside odors and filter pollutants, but in some cases they aren’t enough, and with older cars that had poor or no cabin filters, you might want to recirculate air if you are somewhere with lots of pollution or stuck in traffic where there can be a lot of particulates and emissions you may not want to breath in.
Lastly, humidity. On modern cars and most older cars the AC acts as a dehumidifier. In general modern cars are meant for the AC to be ran with the heater or when you want cool air. Many automatically run the AC at all times when recirculate air is used.
If your windows are up and the recirculate function is used, breathing and general bodily functions release moisture into the air. If you are recirculating air and not running the AC, that humidity can build up as the air is recycled over and over. If the temperature and humidity are in certain ranges such as when the air outside is colder than the air inside the car, you can get “fogging” where you get a haze or droplets on the inside of the glass such as the windshield. It is generally recommended by most manufacturers to run the AC when recirculating air- especially if fogging is an issue, as the AC dehumidifies the air and can help prevent or remove fogging.
If this isn’t an option or desirable, opening a window or windows can help allow moisture to escape. It can generally be a small opening aka “cracking a window.” Most modern cars with working AC shouldn't require this but older cars and sometimes newer cars too can use this trick.
Conversely- because AC dehumidifies air, it is especially true when recirculating air that you can end up with dry feeling air. If you are sensitive or have sensitive skin or certain skin conditions, this can be unpleasant. So you may choose to use AC with the recirculate button off to allow outside humid air to enter and help raise the humidity or keep air “fresher.”
Not all cars allow or require all functions. When we think of AC we think of cold air but generally the AC can be ran with the heater and you still get hot air, you just get that dehumidifying effect. Sone cars do not allow the AC to run with the heater and will automatically turn off the AC. Some cars use other methods to achieve dehumidifying or just aren’t designed to dehumidify heated cabin air at all. So individual climate control systems differ by make, year, model, etc. and this is just a general guide with examples. To close up humidity- if you do have a use case where you prefer or need to run AC and recirculate for long periods but are sensitive to dry air, there are humidifiers made for in car use and many are very affordable. Between the dehumidifying of the ac and the humidifier you can generally find a balance for comfortable and manageable humidity and cabin conditions.
If it is cold or hot out and you are running the heater or AC, recirculating air can be advisable because the outside air needs more heating or cooling to reach your desired temp while the inside air that has already passed through the heater/AC is usually closer to the desired temp so takes less to maintain that temp.
If you are driving somewhere with bad odors like near certain crop fields, large cattle ranches, sewers, industrial plants etc. you might recirculate to help keep the odors out.
If an odor is from inside the car like a fart or a baby pooping or a food/drink spill etc. you may want outside air so turn the recirc off generally.
Most modern cars have cabin air filters that can help reduce outside odors and filter pollutants, but in some cases they aren’t enough, and with older cars that had poor or no cabin filters, you might want to recirculate air if you are somewhere with lots of pollution or stuck in traffic where there can be a lot of particulates and emissions you may not want to breath in.
If your windows are up and the recirculate function is used, breathing and general bodily functions release moisture into the air. If you are recirculating air and not running the AC, that humidity can build up as the air is recycled over and over. If the temperature and humidity are in certain ranges such as when the air outside is colder than the air inside the car, you can get “fogging” where you get a haze or droplets on the inside of the glass such as the windshield. It is generally recommended by most manufacturers to run the AC when recirculating air- especially if fogging is an issue, as the AC dehumidifies the air and can help prevent or remove fogging.
Conversely- because AC dehumidifies air, it is especially true when recirculating air that you can end up with dry feeling air. If you are sensitive or have sensitive skin or certain skin conditions, this can be unpleasant. So you may choose to use AC with the recirculate button off to allow outside humid air to enter and help raise the humidity or keep air “fresher.”