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The big issue, as first reported by Thurrott.com's Brad Sams, is that with the Windows 10 Anniversary Update, Microsoft disabled the ability for webcams to use MJPEG or H264 - two of the leading standards for encoding video in transit between the camera and your PC.
The reason, as explained by a Windows camera engineer in an official Microsoft support thread for this issue, is that Microsoft has instead moved towards a different video standard called YUY2. By enabling both YUY2 and the other technologies, the engineer explains, there was a strong chance they'd get in each other's way and result in lousy video.
The end result is that any webcam that uses MJPEG or H264, which includes popular models from companies like Logitech and Creative, aren't working quite right. As Sams reports, lots of users are finding that their webcam images freeze after about a minute of using them.
While that support thread is full of both consumers and business IT managers grumbling about the issue, it's hard to know exactly how many users are affected by this issue. But if you are in that camp of Windows 10 Anniversary Edition upgraders who are having issues with your webcam, at least now you have an inkling as to why. The good news is that a fix is on the way, but that engineer says it may not be coming until September.
We've reached out to Microsoft and will update if we hear back.