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Describes the use of a real-time visual processing theory to analyze real and illusory contour formation, contour and brightness interactions, neon color spreading, complementary color induction, and filling-in of discounted illuminants and scotomas. The theory also physically interprets and generalizes EH Land's (see record 1979-05257-001) retinex theory. These phenomena are traced to adaptive processes that overcome limitations of visual uptake to synthesize informative visual representations of the external world. Two parallel contour-sensitive processes interact to generate the theory's brightness, color, and form estimates. A boundary contour process is sensitive to orientation and amount of contrast but not to direction of contrast in scenic edges. It synthesizes boundaries sensitive to the global configuration of scenic elements. A feature contour process is insensitive to orientation but sensitive to both amount …