PBR or Physically Based Rendering is a method of governing how the lighting interacts with a virtual environment. More specifically it is an umbrella term for a wide variety of shading schemes, all of which take into account not just the raytracing (or raycasting) of beams of light from every light source in the environment, but also the properties the materials in that environment would actually have.
In other words it takes into account what materials the textures on objects are supposed to represent, and checks to see how that material would affect a natural light beam striking it, modifying the light ray accordingly. In other words it combines diffuse and specular lighting into a single system, balancing different levels of both, according to the material encountered. This is done by making every surface reflective as a given, and then controlling how much reflection to create according to what the local database has to say about the material properties of the textures used, or even the material properties of whole objects.
Textures that would normally be considered lit by diffusion, become blurred reflections with a percentage of the light simply absorbed. As the material becomes more shiny, so the reflection becomes increasingly more perfect by stages, with less and less absorption taking place.
Understandably, PBR methods are much more computationally intensive than a simple raytrace or raycast lighting system, neither of which could themselves be described as particularly lightweight. However, because they are a single system that mimics the effects of both a diffuse and specular lighting system in one, more simple system, the effect is you are practically halving the amount of work your lighting system has to do to create realistic results, and those results certainly speak for themselves in the sheer levels of realism created.
For interactive virtual environments, PBR is still possible despite the processor overhead, so long as you are not assessing the material each polygon face is showing in real-time. Whilst real-time assessing of how a user has just reskinned an object mid-session by adding a wooden texture manually where a metal one was before, is not going to be possible with current PBR methods, a pre-rendered environment is certainly much more workable.
See Also: Raytracing, Raycasting, Ambient Occlusion, Indirect Light, Specular Coefficient, Caustic Lighting, Level of Detail, Progressive Radiosity, Luster
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