Gamma is a reference to a mathematical formula where a video signal is raised to the power of one over the chosen gamma. The visual result is a change in mid-tone contrast, while maintaining the 0 and 1 black and white points of the image.
Gamma has played a strong role historically in video, since cathode ray tubes used in the traditional television sets had a gamma response to the signal fed to the tubes. As a result gamma compensation was applied to the video signal to compensate for the bias in the tubes.
Today, video signals still carry this gamma bias, even though consumers have largely moved to digital flat panel displays that exhibit much more linear responses to the signals applied.
Gamma operations are typically applied to calibrate monitoring systems and as a general contrast color correction operation when grading footage.