Glossary
Image on right has attenuation
In the real world, light diminishes over distance. Objects far from the light source appear darker; objects near the source appear brighter. This effect is known as attenuation.
In nature, light attenuates at an inverse square rate; that is, its intensity diminishes in proportion to the square of the distance from the light source. It is common for attenuation to be even greater when light is dispersed by the atmosphere, especially when there are clouds or fog present.
By default, attenuation is not used by the lights you create in gmax. Consequently, the distance of the light to the object is meaningless. Only the angle of the light to the surface has any effect unless you turn on attenuation.
gmax lets you explicitly set where attenuation begins and where it ends. This is partly so you don't have to worry about setting up strictly realistic distances between light objects and the objects they illuminate. More importantly, this feature lets you fine-tune the effect of attenuation. In outdoor scenes, attenuation can enhance the effect of distance. In an indoor setting, attenuation is useful for low-intensity light sources such as candles.
Note: Light attenuation is not visible in the gmax viewports. It might or might not be supported by your target game engine.