What makes any discussion about middle gray difficult is that
there are many different types of middle gray - physical world,
camera image, meter, perceptual.  The first three types are
cover in some detail in the thread "Is the F factor relevant or
should I cancel it out?"   According to exposure theory, 100%
reflectance falls at a point approximately 0.92 log units above
the metered exposure, which makes it Zone VIII. The shadow falls
approximately 1.28 log units below or 0.6% reflectance. Flare
brings the shadows up 0.34 log units to have them fall 0.94 log
units below the metered exposure. The metered exposure will then
fall at 12% reflectance. I've attach an example showing the
range of Reflectances, Reflection Densities, and exposure values
w/ and w/out flare for the average scene.  Color is a
psychophysical phenomenon. We don't see tones in a linear way as
Ralph's reference to Fechner describes. Munsell found that 18%
was the perceived middle gray using a 10 step scale. In the
early 1940s, the Optical