You are correct in thinking of the ISO setting as gain. It helps understand where the CCD noise comes from. But exposure is not gain. Exposure is the actual "signal" that gain is applied to...
Eric thanks for your reply. My doubt is clear for ISO setting. I wanted to compare it with exposure compensation. I'm sorry for the typo. What is exposure compensation? Is it addition/subtraction or amplification? In other words, if we modify exposure compensation, does it change the gain of photo sensor (I guess not) or does it add/subtract some constant voltage/current to the signal to control average brightness?..
I believe that exp comp is just a way of telling the camera to adjust it's shutter speed or aperature setting to over or under expose the picture compared to what it deemed is "right."..
This is actually a deep subject. Exposure compensation works the same way as for film cameras. The whole exposure setting in cameras is designed to properly expose for 18% gray (check out Kodak's "gray cards" available in camera shops). So you take a picture of a gray sweater that fills the view and, yep, it looks grey. Now try taking a picture of a white sweater that fill the view again. You'll probably be shocked to see another gray sweater! The camera took in enough light to correctly show you "gray." If you want an image that is mostly white (snow, white clothes) or black (shadowed figure, unreflective black clothes) you'll end up using exposure compensation.
Now many matrix metering schemes manage to compensate internally if even a small part of the image is different in brightness than the rest. But all will fail if a certain brightness fills the image or you use spot-only metering. Getting a feel for how much compensation you need to get that polar bear or that black cat exposure is part of the skill of photography and just takes practice. Fortunately a digicam gives you instant and nearly-free images to learn. An alternate technique is to meter off a gray card set in your scene and use that exposure.
That is the fundamental purpose of gray cards sold in stores...
I am looking for information on how to use 18% grey- card. Do I have to take different exposures such as a exposure under cloudy sky and a exposure under a sunny sky. I am using a olympus 8080 and hope to put the different exposure reading into the cameras memory. Also the way to get a reading from a grey card..