Many components of cells cause changes in the phase of transmitted light by their innate properties. These properties might be the slope and the steepness of a specific structure, a structure that modifies the rate of change in refractive index or simply changes in the thickness of a given structure. As these properties (e.g. cell thickness) often change gradually over a certain area (instead of changing instantly), the change of the phase of light over this area also occurs gradually resulting in a phase gradient. Phase gradients will diffract the incident light which causes a change in the angle of deflection of the light.
Due to the oblique illumination that is employed in modulation contrast, the change in the angle of deflection might greatly be affected and the light will pass the modulator in a different area compared to non-deflected light. In the resulting images areas of the cell(s) that are more or less homogenous in turns of slope, steepness, thickness etc. will be displayed in grey. The same is true for the background of the image, as light passing these homogenous areas does not experience a phase shift due to phase gradients in the specimen and will hardly be deflected.
In a modulation contrast system non-deflected light passes the area in the modulator with 15 % light permission, resulting in grey color for homogenous areas of the cell(s) and the background. When light passes areas of the specimen that cause a phase shift (e.g. changes in the slope of a cell membrane), the light is deflected either to the dark (1 % permission) or the transparent (100 % permission) area of the modulator. As the specimen is obliquely illuminated, the image will appear darker from one side of the gradient (where the light is deflected to area with 1 % permission) and brighter from the other side of the gradient (where the light is deflected to the area with 100 % permission).