Our Milky Way Galaxy contains a great deal of intersteller gas and dust. Most of it is confined to a pancake-shaped region near the plane of the Galactic disk. Wherever the density of gas is great enough, stars form from the gravitational collapse of these clouds. We call these star-forming regions diffuse nebulae. These clouds are more than nine-tenths hydrogen gas.
Diffuse nebulae can shine two ways. They can emit light from excitation of gas by energy from stars within. These are termed emission nebulae, also known as HII regions. Emission nebulae appear red, and examples from my pictures that show this include M17 and M42. Other diffuse nebulae shine because of reflection of starlight, and appear blue. An example is M78, though it is not in color.
Since star formation occurs, open clusters eventually evolve from these nebulae. There is a smooth continuum from nebulae to star clusters. Good examples of beginning, middle, and end on this continuum are M42, M8, and M45, respectively.
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M 1, "Crab Nebula" NGC 1952
M 8, "Lagoon Nebula" NGC 6523
M 16, "Eagle Nebula" NGC 6611
M 17, "Omega Nebula" NGC 6618
M 42, "Orion Nebula" NGC 1976
M 43, NGC 1982
M 78, NGC 2068
The "teapot" of Sagittarius and eastern Scorpius, with ten M objects labeled.
Emission nebulae -- M8, M17, and M20 -- appear red. Note the two faint emission nebulae to the lower right of M6. The rest of the M objects labeled here are star clusters. The photo looks directly toward the center of the Galaxy, where star clusters and nebulae abound.