Terrywoodenpic
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If I may attempt an answer...
Think of the white plastic dome as an artificial white highlight whose presence tells the meter to give the exposure that will reproduce this as a white highlight should be. If the reading is taken in the shade, any white highlights in the shaded areas will come out white, which implies that the more brightly lit ones in the sunny areas will be relatively overexposed. If the reading is taken in the sun, the converse applies. An incident reading ensures that highlights situated in the same lighting as the reading was done from will be correctly exposed.
This matters more with slide film (and digital) since blown highlights are lost forever.
If the subject brightness range falls within the capability of the film to record, then this method works perfectly well with negative films. It only fails when the subject brightness range exceeds that of the film to record. This latter property can be adjusted by development time, which is where the Zone System comes from to ensure that on the one hand all the required tones can be printed and that they fall on the correct shade of grey in the print. The Zone System also has a built in assumption that may not always be true in that it assumes darkroom printing and the limited (relatively) tonal range of darkroom papers. Step outside this scenario to scan and digitally print, and the tonal bottlenecks become different.
Yes... But when it come to Digital. Hand held meters are largely redundant, except for the special case of studio work. and balanced flash out doors.
Even in B/W film photography blocked highlights are a problem in terms of quality loss. When they reach the top shoulder of the characteristic curve they are compressed and tonal differences become imperceptible. i.e. blocked.
Even developing to a lower gamma can not rectify this, as the contrast becomes even lower.
Reducing the gamma lowers the contrast of the entire curve from shadow to highlight and so reducing the difference between each grey.
Taken to an extreme, this loses all detail and apparent sharpness into a morass of uniform grey, and in the other extreme to pure black and white, as in graphic lith film.