Actually it never worked with me... I spent around 4 hours trying to get it working, took around 200 photos in different angles and distances, with different objects and in good light conditions and the app always gave me "Couldn't defocus background". I thought I could be missing something, so I opened this thread before giving up...
Other possibility I'm thinking now is that our camera software may be buggy, for example, my mother have a Lumia 620 and that phone have almost identical specs of Xperia M (the only difference obviously being the OS and the RAM amount -- I ever read somewhere that the camera modules from Xperia M and Lumia 620 may be identical, just in a different packaging) and the background defocus app from Lumia (Nokia Refocus I think) always works, so our camera module certainly is capable of doing that, but it just doesn't work
Another strange thing is that I also read complains from Xperia SP users which have a way better camera than Xperia M (Xperia SP has 8MP camera with Exmor RS for mobile) and they apparently can't get Background Defocus working too...
Sony Xperia M dual [C2004]
ROM: 15.5.A.1.5 (stock)
Android version: 4.3 (rooted)
Bootloader: locked (unlockable)