The fuck does physically based rendering mean?
think of an amount of light hitting a sphere or hemisphere as energy. some amount of it is absorbed and retransmitted while some of it is reflected how much is reflected and where it is reflected is determined by the material properties. if you have a specular surface that isn't very shiny then light might be reflected over a large area. Laws of physics state that the amount of outgoing energy can't be greater than the amount of incoming energy, in all likelihood it's a little less.
When you do the most basic phong model you have 3 basic parameters, the surfaces diffuse color, it's specular color and it's specular falloff (an exponent). The problem is increasing the specular falloff actually results in a loss of outgoing energy which an artist might compensate for by cranking up the intensity of the specular color but this can also result in outgoing energy being greater than incoming energy.
We can change it so that our reflectance model is physically based or at least normalized such that our specular highlights increase in intensity as we increase their shininess in a physically correct manner. Think of all that specular highlight mapped onto the surface of a hemisphere or the inside of a bowl, the amount that hits the bowl should always be the same, but if the material is shinier the concentration should be higher.
Also in the Kojima video they talk about linear space EVERYTHING. Everything we see on a monitor is passed through a gamma curve that causes low levels of light to be more compressed and high levels of light to be more spread out. if we consider the grayscale example then the difference between level 255 (white) and 254 is a lot larger than the difference between 0 (black) and 1 because if they were the same we would see a lot of banding in dark colors and wouldn't be able to appreciate the differences between the light colors.
The problem with this is when you create a texture or take a photo, what you see and what's on the hard drive are two different things, these images have to have the reverse gamma function applied so that they look normal on a monitor. Because of this they don't interact correctly with the rendering system and cause things to look all kinds of weird in different lighting environments because the lighting system works in linear terms which is physically how light works.
In some way the idea of physically based rendering is essentially moving away from perceptually based techniques which wind up not looking right or requiring a lot of tweaking in order to generate good results. It also means moving towards techniques which utilize principles of physics to generate a more realistic simulation which makes it easier to create assets, build levels, change lighting conditions, and have it all just work properly.
More generally it's about incorporating the physics of light interactions with objects into rendering engines.
Links for reference
Physically Based Shading Model
Linear Space Rendering From his work on Uncharted 2.
