Luminescence dating is a rapidly expanding field.  Recent advances in methodology and instrumentation have improved both its accuracy and precision, such that it is now becoming an important player in Quaternary science.  The advantage luminescence has over other techniques is the ability to date directly events of archaeological and geological interest: the last heating of ceramics and lithics and the last exposure of light for sediments.  This often eliminates the need to establish a linkage between the dating event and the target event and thereby the loss of accuracy associated with such bridging arguments.  Luminescence is not as precise as some dating methods, but errors between 5 and 10 percent are commonly obtained. (Go in About Luminescence Dating)

Luminescence is the emission of light from crystalline materials following the absorption of energy from an external source.  It is distinguished from other light emissions such as fluorescence by a time interval between absorption and emission, an interval of sufficient duration to permit dating on an archaeological time scale.  The external source of energy is naturally occurring, ionizing radioactivity (alpha, beta, gamma and cosmic radiation).
The time lag can be understood by reference to solid state energy band theory.  Ionizing radiation excites electrons from the valence band, or ground state, across an energy gap to the conduction band where they are free to move about.  Energy levels within the gap cannot normally be occupied, but crystalline defects resulting in localized charge deficiencies allow occupation of metastable energy levels within the gap. Excited electrons or electron vacancies (holes) can thus become trapped at these defects.  Release of these charge carriers from the traps requires an energy stimulus, usually in the form of heat or light.  Upon release the electrons and holes recombine and return to the ground state, in the process emitting light, or luminescence.  If the stimulus is heat, the emitted light is called thermoluminescence (TL).  If the stimulus is light, it is called optically stimulated luminescence (OSL).  The latter includes stimulus not only from the visible spectrum but from ultraviolet and infrared radiation as well.  In the case of infrared, the emitted light is often called infrared stimulated luminescence (IRSL).
Materials with suitable luminescence properties can be dated because at some point in the past traps are emptied of their charge by sufficient exposure to heat or light.  This amounts to a zeroing event.  It is important for dating that the zeroing event corresponds to the date of interest.  Subsequent to zeroing, traps become refilled because of continued ionization by radioactivity and a latent luminescence signal steadily accumulates.  In the laboratory the traps are again emptied and the intensity of the natural luminescence signal measured, TL or OSL, is proportional to the concentration of trapped charge that has accumulated.  This in turn is proportional to the amount of absorbed radiation, which can be related to time if the average dose rate per unit time can be estimated.  This is determined from the current dose rate, which can usually be assumed constant over archaeological time because of the long half-lives of the main naturally occurring radionuclides, 238U, 232Th and 40K.  The dose rate includes an internal component (short- ranged alpha and beta irradiation) from the sample itself and an external component (long-ranged gammas and cosmic radiation) from the environment.
The age equation is expressed as a simple ratio:

           Age (ka) = De (Gy) / DR (Gy/ka)

where De is the equivalent dose in grays (unit of absorbed dose), and DR is the average dose rate over time.  Time is given in this equation as ka (1000 years).  Equivalent dose is the amount of radiation dose that is necessary to account for the measured luminescence signal, in other words, how much radiation is needed to get from zero luminescence to the current, natural luminescence.  Dividing by the dose rate gives the age. 
De is measured by calibrating the natural signal against laboratory-administered radiation.  Because traps have different energy depths, some traps are not very stable at ambient temperatures and lose their electrons over the time period relevant to archaeology.  Other traps are sufficiently deep that they are not easily emptied during the exposure to heat or light.  Obviously, neither very shallow nor very deep traps are useful for dating, and an important task in dating is to isolate those traps which were emptied at the time of interest and which have been stable since then.  Because the natural signal is the product of only stable traps and because signals induced by artificial irradiation include unstable components, the task involves making these two signals comparable, using various thermal (“preheat”) treatments to simulate long periods of time, “plateau” tests to gauge comparability, and normalized dosing to equalize sensitivity.