Understanding the LCD Technology
The in's-and-out's of the LCD Display

What exactly do all those statistics, numbers, and specs mean on the side of the box?

Color Gamut

The human eye can perceive a wide array of colors far more complex then a computer or even television display can produce.  The number of different colors a display is able to produce is defined as the Color Gamut, which is commonly measured as a percentage of the NTSC (National Television System Committee) color standard.  The standard range of the color gamut for LCD displays is 72 percent, but many recent innovations in technology have allowed displays to produce up to 100% of the NTSC standard and have even gone beyond that.  In general, the higher the color gamut range, the more colors your display will be able to accurately create.

Color Depth  

An LCD's color depth defines the number of levels that each primary color can render.  In an 8-bit panel, the red, green, and blue colors can each render 256 times, for a total of over 16.7 million possible color combinations.  With 6-bit LCD panels, which are becoming increasingly more common, the red, green, and blue colors can each render only 64 times, making a total of 262,144 colors.  This is a huge difference between the 8-bit and 6-bit panels.  In order to compensate for this huge gap, manufacturers use techniques such as dithering and frame-rate control to claim up to 16.7 million colors on their LCD, making it hard to distinguish between an 8-bit or 6-bit display.

Backlight

The majority of desktop LCD monitors use backlights made of cold-cathode fluorescent lamps (CCFL).  However, the use of LEDs for backlights is growing more popular.  LED backlights use a grid of either white or mixed red, blue, and green LEDs to create the backlight.  It is believed that with the use of LEDs, the panel's color is improved because the backlight matches the color filters of the pixels, thus producing a wider color gamut.  The downside to LED backlights is that they are more expensive than their CCFL counterparts and can sometimes age at different rates.

Inputs

Ideally LCD displays should come with at least one DVI port, which is the current standard for LCD displays.  However, the current standard is slowly becoming blurred as newer and better digital interfaces, such as HDMI and DisplayPort, become widely available.  Both HDMI and DisplayPort offer greater bandwidth than DVI, which can be crucial to LCD displays looking to hold a resolution higher than 1920x1200.  If you are looking for your LCD to display video at resolutions higher than 1920x1200, you'll definitely be wanting an HDMI or DisplayPort compatible display.  Of course it goes without saying that you won't (hopefully) be planning to connect your new LCD monitor with a VGA cable.

HDCP

This basically means that if your LCD display doesn't support HCDP (High Definition Copy Protection), you won't be able to watch HD DVD or Blue-ray movies in full resolution.

Contrast Ratio

Don't pay attention to contrast ratios, they are all hype from the manufacturers who each use a different standard for testing, so there is little to no basis for comparison.  Manufacturers have also taken to reporting dynamic contrast ratio's, which are typically much higher (thus much more impressive) than standard contrast ratio's.  Some monitors offer a dynamic contrast feature which performs on the fly adjustments to the contrast ratio in order to provide better grey-scale contrast.  The downside to this is that these adjustments aren't always perfect and your picture can be thrown either to far into the dark range, or too far into the white range.  Another downside to dynamic contrasting is that if scenes in a movie or game differ greatly, you will notice the image ghosting as the monitor tries to keep adjusting the contrast to better suite the scenes. 

Pixel Response Time

Pixel response time refers to how long a pixel takes to change from once color to the next.  A slow pixel response time can result in ghosting in fast moving scenes such as games.  As pixel response times improve, the more fluid the video will when watching.  Pixel response time is completely unrelated to the refresh rate, and many will argue that refresh rate doesn't matter in LCD's, only pixel response times.

Source: Maximum PC

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