I owned an older Olympus Digicam. They had the same warning with their
equipment. Their explanation was that the Lithium batteries get too hot
during discharge and the higher temps will damage camera components. Heat -
that's it. Nothing fancy.


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...
Just purchased a Sony Cybershot DSC-H1 digital camera.
It came with 2 NIMH AA batteries. The manual says...

You can not use lithium batteries. I have always used non
rechargeable lithium AA's for emergency back ups. Why
doesn't Sony want these batteries used?