The major perceptual effect is to make the darker areas lighter and the lighter areas darker, and it affects the entire image. The practical purpose is to even out the dynamic range of an image where, like the image originally posted in this thread, the lighting is uneven in a gradual way, although of course it does affect the dynamic range overall. Back in the days of PSPX1, a member named Peter Anderson (aka Rusty) created a script called Rusty's New Dynamic Range script, the stated purpose of which is to increase the dynamic range of an image.