Two things that I mentioned previous posts were that the eye’s response to light is logarithmic, and that in 8bit color depth there are a limited range of values with which to store your information. Because of these two factors, when video engineers were coming up with standards it was concluded that it would be beneficial to allocate more of that spectrum to the brighter parts of of the image (to which our eyes are more sensitive) than the darks. This was achieved by encoding a gamma to the image.
Gamma doesn’t really mean anything; it’s the Greek letter γ. However in our case it refers to an exponent. Actually, I have no idea why gamma isn’t just called exponent. The equation to adjust the gamma of an image is: output = input^gamma. Strangely, Nuke’s idea of gamma is inverted, so the equation in Nuke is: output = input^(1/gamma). From here on in I will refer to the inverse gamma so as to remain in keeping with Nuke’s workflow.