Color
Allows you to specify the color of the light. I suggest avoiding "white" light; for realistic lighting you can adjust the color very slightly to the yellow side of white (warm) or the blue side (cool). Mixing the colors of your lights can add richness and dimension to your scene, as we'll see below. The color attribute can also be mapped with an image to get effects such as light passing through the leaves of trees, or through a stained-glass window. A series of images or an avi file can be used on the color attribute of a spotlight to simulate a movie projector.
Intensity
Used in conjunction with Decay Rate, allows you to adjust the brightness of the light. A negative value here will remove light from a scene.
Illuminates by Default
When checked, the light illuminates all objects. If left unchecked, you need to select the objects you want to be affected by the light and link them.
Cone Angle
Refers to the size of the light, in degrees
Decay Rate
No Decay - Light intensity at the target equals the light intensity at the source. There is no diminishing of the light at all.
Linear - Light diminshes evenly from the source to the target
Quadratic - Rate of Decay increases over distance. This is what happens to light in reality; the intensity of the light is inversely proportional to the square of the distance. As you move a light away from the object it illuminates, the intensity of the light will fall off drastically.
Cubic - Rate of Decay increases over distance at a rate much more drastic than reality. The intensity of the light is inversely proportional to the cube of the distance.
In the above examples, four spotlights were positioned over a plane. Each spotlight used the all the same settings with the exception of the decay rate, which is indicated above the light sample. You can achieve a substantial amount of subtlety using a linear or quadratic decay with your lights; the light will fall off your objects very naturally.
Dropoff / Penumbra
A spotlight shining directly onto a surface creates a circle of light. The dropoff value refers to the amount the light diminishes from the center of the circle to the edge. The numeric value of the penumbra creates an additional circle, either inside (negative value) or outside (positive value) the circle. The penumbra refers to the amount the light diminishes from the edge of the original circle of light to the edge of the penumbra. Dropoff and Penumbra can be used together in conjunction with Decay to create very subtle, artistic lighting effects.
