The classical approaches to lightness perception involve normalization by a image statistics, e.g., dividing or subtracting out the mean luminance. Low-level operations such as lateral inhibition can implement such normalization locally. However, we have devised stimuli that dramatically demonstrate the inadequacy of these traditional models. The new illusions indicate the importance of mid-level visual processes that utilize information about contours, junctions, and regions. We propose that the visual system estimates "optical atmosphere" at each point in a scene, and propagates lightness constraints within regions defined by atmospheric boundaries. Lightness constancy can be considered as a statistical estimation problem, where the statistics are gathered within an adaptive window that prevents the mixture of samples from different lighting conditions.