Bloom

From the NWN2 Teakguides:

Bloom Effects: Bloom effects change the quality of the lighting to create a more saturated, richer and hazier looking game world. The screenshot comparison above demonstrates the difference between enabling or disabling this option in NWN2. If bloom is not to your taste, you can disable it to gain a few FPS, however aside from making the game world seem more vibrant, it also works to reduce the appearance of aliasing (jaggedness) at far less impact than enabling Antialiasing. Note that the more advanced HDR lighting can't be enabled in NWN2; even though there is a UseHDRIfAvailable setting it does not currently work.

Periodiko posted additional comments in this forum thread:

Technically speaking, if you crank bloom up then it will blur everything you see a little, but it will blur bright things far more than dark things. If you crank it really high it will create a dreamy sort of effect, where the bright lights are a little too bright and everything is a little blurry. If you turn it off then the area will seem darker and more sterile.

The main ways it's used in the Neverwinter Nights Toolset that I've seen is with the "hazy" effect. For example, the Githyanki house in the OC has the bloom cranked up really high so the whole area feels magical and dreamy. It is also cranked higher during daytime lighting settings to reproduce the haze of the sun. I think the default morning setting that you see first-thing when you don't adjust the time-settings has it running pretty strong.

ciViLiZed posted the following explanation of some of the settings:

BloomSceneIntensity (BSI) : Sets the overall brightness level of all lights. (With this, individual light intensity values in effect become relative rather than absolute.) As it brightens light, it will not brighten places where light does not reach. A setting of 0, eliminates all light except the highlights (see below). A negative value creates negative brightness which effectively darkens highlights. A BSI of 1, with other bloom settings set to 0, has the same effect as if bloom was disabled.

BloomHighlightThreshold (BHT): Sets the size and quantity of highlight hotspots. Models and tiles have defined zones (“hotspots”) where light causes highlights when it hits them. Different hotspots will be highlighted depending on the angle of the light (e.g. GroundLight vs SkyLight). A higher BHT value will result in bigger and more numerous hotspots. A negative value (regardless of the number) sets hotspots to their maximum. The minimum value at which hotspots appear seems to be about 0.5.

BloomHighlightIntensity (BHI): Sets the intensity of the highlights. Highlights will expand/flare more and more as the value is increased. A very high BHI value (e.g. 1000) with a low BHT (e.g. 0.5) will show clearly where the hotspots are located. Increasing BHI and BHT will eventually burn out the entire scene. A negative BHI value creates darker and darker highlights (eventually creating a negative effect if BSI is positive)

BloomBlurRadius (BBR): Multiplies each individual highlight and spreads these “clones” around the original, like petals of a flower in… bloom. (Original highlight size though seems to be reduced in this operation, making it seem that the highlight might be broken down and its pieces spread, rather than it being cloned.) A higher value increases the distance (i.e. radius) between the center of the original and the center of the clones/pieces. The clones/pieces are spread regularly in a flat grid pattern around the original highlight. Typically, 8 clones/pieces appear to be created. The angle of the flat grid remains perpendicular to the point of view, while the distance between the clones/pieces varies with viewing distance. BBR value is an absolute, so prefixing a negative has no impact. BBR, BHT and BHI combine to create a blur effect. Increasing the BBR up to a point where the additional highlights detach themselves from their model will result in a ghosting effect.

BloomGlowIntensity (BGI): No effect in interior areas. (In fact, the default interior DayNight stages settings have it set to 0.)

Ovocean added these also:

As I understand it, the bloom effect is a filter applied to each frame by the 3D card.
More precisely, it sorts of make a blured copy of the frame and mix it together with the original. (Consequently, dark parts of the frame spread around as much as bright parts (depending on the BHT). There is no direct link between light sources and the bloom effect.)
The toolset gives us some control over the blur filter and how the blured framed is mixed (I would say 'multiplied') with the original frame :

BloomSceneIntensity : Controls how much of the original frame will be in the final mix (= it's luminosity). Set to "0", you'll only see the blured copy of the frame. "1" stands for "luminosity 100%".

BloomBlurRadius : Defines the radius of the blur (how far colors are spread).
Actually, the blured frame is made by mixing a great number (47, if I can trust my sight) of copies of the original frame, arranged in a repeating pattern. The greater the shift of a particular copy, the more transparent it is. The BBR defines the shift between each copy.
If this is not clear to you, try setting the BSI to 0 and play with great values for the BBR.

BloomHighlightIntensity : Well, now, it looks like there is even one more filter put somewhere in the process. This filter controls the luminosity of the blured frame and the BHI is the main parameter of it : it's the global luminosity value (of the blured frame).

BloomHighlightThreshold : This second parameter sets the (color's) intensity threshold beyond wich the colors are affected by the BHI. I don't know what threshold corresponds to what intensity, but when a particular pixel's intensity is under the threshold, it's luminosity is set to 0.

Finally, here are the settings I use when I want a bloom effect wich slightly blends the colors without modifying the overall luminosity of the scene :
BSI = 0.8
BBR = 10
BHI = 0.25
BHT = 2

PS : I've seen no effect for the BloomGlowIntensity.

Check out the full thread here:
http://nwn2forums.bioware.com/forums/viewtopic.html?topic=564969&forum=113