Lens flare is the term for various artefacts found in photographs. These artefacts are caused when non-image forming light passes through the lens of a camera and hits the film or the digital sensor. Sun flare typically refers to lens flare caused by the sun, although it can also refer to other kinds of rayed "sunburst" effects. You can create sun flare effects artificially using Photoshop's filters.
Types of Sun Flare
A common type of sun flare produces a line of circular artefacts in different sizes and shades, with their centres forming a straight line. Another type of flare produces scattered polygonal artefacts that appear translucent and often have a rainbow appearance. Sun flare can also produce rays of light that spread outward from a central source -- in this case, the sun or a patch of sunlight.
Sun Flare Effects
Lens flare artefacts are generally seen as undesirable but they can sometimes add interest and atmosphere to an image. Rather than trying to create lens flare by fluke, you can use Photoshop's Lens Flare filter. For convincing sun flare, you'll need a picture that includes the sun or rays of brilliant sunlight (coming through trees, for example). From the Filter menu, select Render and then the Lens Flare option. You can then adjust the Lens Type and Brightness settings to get the effect you want. Position the lens flare effect carefully so that it seems to be generated by sun in your picture.
You can make a sunburst flare from scratch using a white or light coloured circle on a dark background; If you're starting with an image that includes the sun itself or a strong area of sunlight, you can work with that. Select the area of the image with the sun or strong sunlight and apply Photoshop's Radial Blur filter by going to the Filter menu, selecting Blur and then choosing Radial Blur. Adjust the brightness, hue and saturation until you get the effect you want.
Sun Flare and Layers
Instead of applying the sun flare directly to your background image you can create it on a separate layer. This has the advantage of being non-destructive -- you are not altering your original image. You can also adjust the opacity of the sun flare layer; the more transparent the sun flare, the more subtle the effect.