Such numerical shortcuts are often just conveniences provided so the user can get results easily and quickly without having to worry about fussy details, like where to put the light sources and what to use for reflectances. As you might expect, there is a penalty paid besides meaningless values, and that is fake-looking images. Have you noticed how these renderings always look pastel and glowing? You're seeing the visual equivalent of AM radio.
Physically-based rendering, on the other hand, follows the physical behavior of light as closely as possible in an effort to *predict* what the final appearance of a design will be. This is not an artist's conception anymore, it is a numerical simulation. The light sources start in the calculation by emitting with a specific distribution, and the simulation computes the reflections between surfaces until the solution converges. The most popular technique for this computation is usually referred to as "radiosity", or flux transfer, and it does this by dividing all the surfaces into patches that exchange light energy within a closed system. This type of calculation is limited for the most part to simple scenes with diffuse surfaces where the visibility calculation and the solution matrix are manageable.
Radiance, in contrast to most flux transfer methods, uses ray tracing to follow light in the reverse direction and does not require the same discretization as radiosity techniques. This has significant advantages when the scene geometry is complex, and permits the modeling of some specular interactions between surfaces. In general, Radiance is faster than radiosity if the scene contains more than a few thousand surfaces or has significant specularity.