Lateral inhibition is one of the first and most important stages of visual processing. There are at least four theories related to information theory in the literature for the role of early retinal lateral inhibition. They are based on the spatial redundancy in natural images and the advantage of removing this redundancy from the visual code. Here, we contrast these theories with data from the retina's outer plexiform layer. The horizontal cells' lateral-inhibition extent displays a bell-shape behavior as function of background luminance, whereas all the theories show a fall as luminance increases. It is remarkable that different theories predict the same luminance behavior, explaining “half” of the biological data. We argue that the main reason is how these theories deal with photon-absorption noise. At dim light levels, for which this noise is relatively large, large receptive fields would increase the signal-to-noise ratio through averaging. Unfortunately, such an increase at low luminance levels may smooth out basic visual information of natural images. To explain the biological behavior, we describe an alternate hypothesis, which proposes that the role of early visual lateral inhibition is to deal with noise without missing relevant clues from the visual world, most prominently, the occlusion boundaries between objects.