I'm trying to wrap my head this stuff, but I don't have the background that you guys have.
Something that seems evident from what Wayne is saying is that we are not dealing with linear data here and so shouldn't try to "jam" linear terms into it.
So, as we know, the histogram is not a linear graph, and, for example, a gray object/card/whatever that spikes in the dead center of the histogram is not linearly half way between black and white but only shows there due to the gamma correction. Linearly, one stop lower than white is half the light, and so a linear scale would show that as "half way" to black.
Wayne, am I on the right track here?
Right.. I think that "whatever" would reflect at 22%.
(0.22 ^ 1/2.2) = 0.50, x255 = 128 50% of full scale
I hope this is perceived more as a concept than absolute numbers. The camera is busy doing other things too, shifting data, for white balance, S-Curves for contrast, etc. Which seems to affect the right end more than left end. But midscale is obviously totally out of the question.
Right, of course.
Linearly, one stop down, or 50% of the light is at midscale (we just do not have opportunity to see that RAW scale). We only see gamma encoded, which is closer to 3/4 scale. And often higher in my notion. It seems pretty hard for any argument to ignore what actually happens.
Whew! Did what I say make any sense at all?
An 18% card reflects 18% of the light that hits it. Ideally, it would be at 18% on a fictional linear scale. 18% is about 46 on a 0..255 linear scale.
Origin: It was said that the human eye response and the human brain sees 18% as middle gray on our perception scale. There is no calibration, just our perception. Naturally, this matters if in a bright scene or a dark scene, and all that stuff. But long ago commercial printers (without computerized color gear) used it to judge their ink output on paper. Ansel Adams picked it up in his Zone System in the 30's. Again, he printed on paper to judge it (and certainly there are several other variables too... film and paper exposure and development, etc).
Kodak absolutely does/did say in the packaging for their 18% gray card that if we expose off of it, we must open 1/2 stop (in the sun). There was a period they dropped this statement, it must have confused the customers or something, but they dumbed it down for awhile. My understanding is that they have put it back now?
It is said that Kodak
(that is a link, it does not show as such here) wanted to make it be a 12% card for photography, but Ansel campaigned to keep 18%. My guess is Kodak did not care to have Ansel doing this campaign against their judgment in public. 
18% cards: If we make a few assumptions...
That 100% of the full direct light (whatever that means) would be adjusted to be at histogram 100% (255).
Let's say, if a 90% white card was at 90%...
That the angle of the card gives us the maximum 18% reflection,
and I think that the moon is blue,
then it should be recorded at 18% on a linear scale, in the RAW data at the sensor. This happens to be at (0.18x255) = 46 on the linear histogram scale (but we don't have tools to see the linear RAW data).
After conversion to RGB and gamma encoding (which we do see), it should be about
(0.18 ^ 1/2.2) = 0.46, x255 = 117 46% of full scale
A little left of center is a good value. Some diehards recalibrate their light meters to put it at 50%. Even the Thom link above mentions that. But of course, there is no justification for it at all, neither 18% or 128 is the midpoint of anything. However, it is a tiny error. Just the wrong reason.
The only harm is to understanding.

