The above image contains a series of 32 steps in gray level from black at the left to white at the right.
The image below contains a series of 64 steps in gray level from black at the left to white at the right.
Look at the 2 images on the screen...are they different? You should be able to clearly see the distinct steps in the top image. In the lower image it is difficult to see the distinct steps.
What do you conclude?
For a "typical" display, humans can distinguish something more than 32 levels and something less than 64 levels. That is, we can distinguish more than 5 bits but less than 6 bits.
Look at each vertical panel in the above image.
Is the gray level the same at the left side of each panel as it is at the right side?
You should see the panels appear to get darker from left to right. In fact, they are 8 perfectly uniform panels. The appearance is the result of a phenomenon called "lateral inhibition" in human perception that ties to increase the apparent contrast between adjacent areas of different brightness.
For another demonstration of this phenomenon, look at the image below.
Which narrow vertical stripe looks darker? In fact, they are the same brightness. The one on the left looks brighter because it is surrounded by darker area.
What do you see? Look at the screen from different distances. The image increases in frequency from left to right and decreases UNIFORMLY in contrast from bottom to top. Assume you are sitting 1 meter from the screen. The tangent of 1/6 degree (recall peak human sensitivity is 6 cycles/degree) is .003 so you should see peak contrast at a spacing between dark bands of about 3mm. Why do you see less contrast at the lower frequencies?
The same phenomenon that causes the contrast of neighboring areas to be emphasized, causes us to lose contrast perception at low frequencies. That phenomenon is called lateral inhibition.
Why do you see less contrast at the higher frequencies?
The higher frequencies are not percieved well because the lens and aperture of the eye filter out the high frequencies.
Measure the spacing between the typical lines in some text character on your screen. What is your measurement? The distance from the focal center in the lens of your eye to the retina is about 17mm. What is the size of the image of a typical character on your retina?
Consider an image with 512 alternating vertical black and white stripes. (You may not even be able to see the alternating stripes because of poor screen resolution. But take my word for it, they are there.)
Now look what happens when we sample the above image at successively lower rates.
Neat isn't it? The image is created by sampling an image with 512 alternating values of black (gray = 0) and white (gray = 255). Starting in row 0, 512 samples of the image are taken. For each successive row, 1 fewer sample is taken from row 0, (i.e. for row 1, take 511 samples, for row 2, take 510 samples, ... for row 511, take 1 sample). The whole row is then reconstructed from the samples by pixel replication. The result is a colossal aliasing pattern.