Finally, I organized the best from this thread into an article. So if you just start reading this thread, it may be the best to read this compressed version. You can download it to read offline. Just drop it into your browser to open.
Here is a link to the compressed article file
http://www.sendspace.com/file/hdvd8f
This is a valid question, dude. Most users start to explore controls but not the principles. Once understood, they are forever your non-aging friends and renderer-independent.
In raytracing the calculations are physically-based(mimic in a realistic way, but still not physically precise of course), that’s what they say in manuals for raytracers. So you need to study physics but not cg lighting then. And if you want to study lighting you also need not only a cg lighting knowledge but a traditional lighting.
You cannot study lighting without concerns about materials and real-world cameras imo.
There is a direct and indirect lighting. A direct lighting is just a ray that hits a surface but stops there, so we have no light bounce. That’s what never happens in real world.


I think that the law of energy conservation applies and any reflected value cannot be stronger than at the start, so reflection most probably will be a bit dimmer, and so is lighting has an inverse-square faloff.
(read further for more correct explanations of reflection and refraction as those mine are not very correct)
Light hits the surface and may either be
absorbed(looks like no light information - black)
transmitted
reflected(or all of this to some extent)


Reflection or transmission may be more of a diffuse quality or specular.


If a light bounces off a diffuse surface a color-bleeding happens.
If a light bounces off a specular surface a caustics reflection happens.
If a light travels through a refracted surface a refracted caustics happens.
If a light is absorbed by a surface with slight diffused refraction a subsurface scaterring happens. And you need a degree of refraction for subsurface scaterring to work. An absorbed light is a diffuse refraction+diffuse value, i.e skin consists of water and flesh(generally speaking), so this causes i to be both refractive and diffuse…
There is also a caustics dispersion of refraction but quite rare, mostly happens in diamonds and produces dispersed caustics(not sure about this last term).It looks like a colored refraction http://farm1.static.flickr.com/45/135751439_3d8ed79d4b.jpg?v=0
and colored caustics http://www.moissaniteco.com/includes/templates/Custom/images/education/fire-dispersion.jpg

Light may be very distant and so we don’t use the inverse-square falloff fot it(but as far as I understand it does have it but we don’t use it for conveniency - fake! Or we need to plavce it in zillions of miles away as the real sun is and insane intensity. So, we fake it), or if not as bright and distant - we use an inverse-square decay(faloff). And this brings a very important note - the realistic scale of a scene is important, because light decaying in a realistic way is tied to the scale by its strength.
Light shadow may be sharp or diffused depending on the size of a source.
There is a law that reflection overrides diffuse, and refraction overrides reflection. What that means is that if you have a highly reflective material such as metal, your diffuse won’t be seen almost at all. So 100% reflective=0% diffuse. 100% refractive - still some little reflection is present, and no diffuse at all(also must be set to black).
All surfaces reflect! The least reflective surface known is having a 0.045 light reflectance http://forums.cgsociety.org/showthread.php?f=21&t=584234 . Most surfaces have a diffused reflection, mirror-like are rare. Why some surfaces have a mirror-like reflection and others are diffuse? Because any surface has a microfaceted structure which is invisible by a naked eye but the rays which hit it go either in one direction(mirror) or hit facets with different orientations and the reflection becomes diffuse.
There are 2 types of materials: metals and all other one. All materials have a fresnel reflection type, all! So you should use it always. A fresnel reflection differs from a straight falloff by its curve: it’s more gradual at the beginning and very steep at the end. But metals have a much more prominent reflection, something like 80\100 value, and your diffuse should be black as long as it overridden by reflection.
Only metals have a colored reflection, so if you need to make a reflection for any other than metal reflection it’s just black-and white.
There is also an index of reflective refraction and refractive refraction, which is always equal(reflective refraction is the same as refractive refraction). The numbers you can find in tables. The index of refraction controls how distorted reflection or refraction will be and for metals brightens the reflection a bit.
See below for part two.