Smooth Shading W -> Shade Smoth (in Edit Mode)
Most objects are represented by polygons and truly curved objects are often approximated by polygon meshes. When rendering images, you may notice that these polygons appear as a series of small, flat faces.
Smooth Shading tries to interpolate surface of model so you can't see faces. Usually we want our objects to look nice and smooth, but sometimes this makes this ugly artifacts than it tries to smooth too large angles between faces. Like in your case - 90 degrees.