Gamma correction, gamma nonlinearity, gamma encoding, or often simply gamma, is the name of a nonlinear operation used to code and decode luminance or tristimulus values in video or still image systems. Gamma correction is, in the simplest cases, defined by the following power-law expression:

where the input and output values are non-negative real values, typically in a predetermined range such as 0 to 1. A gamma value is sometimes called an encoding gamma, and the process of encoding with this compressive power-law nonlinearity is called gamma compression; conversely a gamma value is called a decoding gamma and the application of the expansive power-law nonlinearity is called gamma expansion.

From Wikipedia under the GNU Free Documentation License
Sat Aug 28 17:39:01 2010

gamma after quantize png
graphics.cornell.edu
gamma after quantize png
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is more sensitive to luminance variations at the dark end of the luminance scale Put another way you need smaller quantization steps at the low end See the banding in the following image The way to minimize this problem is to gamma correct the pixels in a higher resolution floating point or say 16 bit integers then quantize Here is a plot showing the effect at low

GammaTest png
all-science-fair-projects.com
GammaTest png
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If your browser does not gamma correct images then you can read your combined video card and monitor gamma on the image at the right at the point where the stripes match in brightness A

color lee gamma jpg
sbclub.org
color lee gamma jpg
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still has a blueish cast Fortunately the Canon ScanGear program allows custom curve editing The green level in the shadows has been increased to restore the grass color A little gamma correction sacrifices some of the detail in the white shirt and dress in order to bring some of the detail out of the shadows The image was also sharpened

From Yahoo Image Search: "gamma correction"
Sun Sep 20 19:30:08 2009