Changing the display luminance is achieved by reducing the total light output for both CCFL- and LED-based backlights. By far the most prevalent technique for dimming the backlight is Pulse-Width-Modulation (PWM), which has been in use for many years in desktop and laptop displays. However, this technique is not without some issues and the introduction of displays with high brightness levels has made the side-effects of PWM more visible than before, and in some cases may be a source of eyestrain for people sensitive to it. This article is not intended to alarm, but is intended to show how PWM works and why it is used, as well as how to test a display to see its effects more clearly.
If you want to know everything there is to know about PWM, this is it.