The interaction between an atomic ensemble and a light mode in a high-finesse optical cavity can easily reach the strong-coupling regime, where quantum effects dominate. In this regime, the interaction can be used to generate both atom-light and atom-atom entanglement. We analyze the dominant effects on the collective atomic state and the light field, and derive a unified approach that can account for atomic entanglement induced both by measurements on the light field, and by ignoring the state of the light field altogether. We present analytical expressions for the entanglement induced by the interaction, and determine the conditions that maximize the entanglement-induced gain over the standard quantum limit in quantum sensors and atomic clocks.
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