Auto Gradation makes pictures look washed out?
Auto Gradation basically tries to preserve highlights and shadows when needed. The problem is that no matter how smart the camera, it's not going to know what is actually in a scene and what detail it should try to save, how much contrast you are going to want in a certain scene, etc. The thing is that you can adjust 'washed out' images in post and easily add some pop. But if the photo has truly blown highlights or crushed blacks/shadows, you can't recover that back in post.
You can do a couple of things to try to develop a better eye for contrast in a scene-
1. Turn on the exposure histogram (I guess it's possible for XZ-1?) which will give you a live readout of how much light and dark is in a scene, and if you need to adjust exposure/contrast.
2. Turn auto gradation off, and shoot some different scenes with varying contrast, and then review the images on your computer. Part of the trick is learning to get a sense of how camera sensors in general have much less dynamic range than our own eyes, the other part is learning how your particular camera deals with contrasty situations.
Also, if you are shooting in dense forests you might actually be running into the problem of the camera over-exposing, which can result in a washed-out image. Cameras use a moderate gray value as a reference point for adjusting exposure, again it doesn't know if you are in the snow or in a dark forest so will over-compensate in each case. In those situations you probably want to adjust exposure to get it right (as long as exposure is close, you can fix this on your computer.)
|Sit on rainbow by frapeace|
|Icelandic landscape by BoDrey|
from Best Landscape of the Week 1