As an avatar in the 3D world, you can choose between two perspectives: third-person and first-person. Third-person is the default, and allows you to see your avatar in relation to the world around it, as well as allowing you to observe your avatar performing various actions.
Third person:
First person:
To toggle this view mode, either hit P, or hit the TAB key, or click the APPS button, and then select the PERSPECTIVE option from the menu wheel.
