This video demonstrates that the human eye (and the visual cortex of human brain) are better at detecting edges and contrasts than they are at determining actual shades of colors. There is a discussion thread about this illusion at Reddit.
YouTube link.
YouTube link.
http://web.mit.edu/persci/people/adelson/checkershadow_illusion.html?gray
@whitcwa: BTW, if you like the illusion you posted, there's a whole bunch of them at Michael Bach's site: (warning: your eyes will hurt)
http://www.michaelbach.de/ot/index.html
Alejo
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If you cover the area where the intensity changes it destroys the illusion that the colour is different on both sides of the line.
The same colour is not present. Would it be the same colour, you would be able to take out the 2 middle colours and see no difference. The minimal difference in colous causes the brain to perceive the difference that is there as a difference in light or shadow. Therein lies the illusion.
http://en.wikipedia.org/wiki/Cornsweet_illusion
http://www.instructables.com/id/Shady-Optical-Illusion/