Isotropic BRDF Based Lighting
The idea behind BRDF is to make surfaces of different materials appear real, independent from the angle you are looking at the surface. BRDF stands for bi-directional reflectance distribution function, which is that here:
There are a lot of different surface models and many complex math formulas to realize some level of BRDF in GeForce3. Instead of going into any further detail I rather suggest we look at a demo picture.
The left sample shows a woman with a velvet dress using Minnaert Reflections, a form of BRDF, the right picture is simply using normal shading algorithms. Unfortunately I had to scale the pictures down, but you can still just about see the difference in realism between the two.