Welcome to Android Central! Permissions fall in several broad categories, so be aware that just because an app requests a certain permission doesn't mean that it wants access to every single aspect of that category. For example, a flashlight app will need Camera permissions because the camera's flash that is used as the flashlight is part of the camera.
A flashlight app should not, however, need access to your contacts. So it still is a good idea to look through those permissions before installing an app. A good developer will explain at least some of the permissions in the Google Play app description, and you should also look at a few pages of the reviews as well, since some of the more astute reviewers may point out some issues.
Keep in mind that at least with Google Play, you're told upfront what permissions the app is requesting. Other appstores on other platforms aren't as forthcoming at the purchasing stage.
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What some of those scary application permissions mean | Android Central