The settings in sanlyn's post in the capture guide are an example, which he used for his particular setup, which is dependent on all components in your capture chain. His choice of tape player, TBC, pass thrus, and capture card, or whatever else was in his video chain will have an effect on what you see in that preview histogram. Understanding that, everyone must adjust their settings on the capture card to their particular setup and even their particular tape they are playing. Reading on the forum, you'll see it written that you should use the crop settings in
Virtualdub (temporarily) to remove any head switching noise at the bottom and any stuff on the top or side edges, while in Preview mode and previewing your tape before you actually start capturing. If you don't have that noise cropped out while previewing, it can give you poor capture card settings because all that edge noise can be darker or brighter than the video you actually care about.
You preview the tape, at least in parts that you think are brightest or darkest (not always obvious, but try your best), and adjust settings so histogram stays out of the red on left and right sides. Brightness shifts the histogram to the right. This is done to get things from being too dark and hitting the red on the left. You adjust the Contrast setting to shrink the histogram's width, so it does not go too bright and hit the red on the right side. You use both Brightness and Contrast together to strike the right balance. Don't worry about getting things maxed out necessarily. You can fix it later in post. It's most important to keep things out of the red so it is not clipped. Clipping causes the same and darker values to be the same level of darkness (i.e. 16 in YUV or 0 in RGB) and the same or brighter values to be the same level of brightness (i.e. 235 in YUV or 255 in RGB). Clipping causes details to be lost in shadows on the dark side and in the highlights on the bright side.
Before you actually capture, remove all the cropping settings (i.e. back to 0 on all sides). The histogram may look out of range now, but that should be due to the edge noise, and not a concern. This is why we preview and calibrate the capture settings with that edge noise cropped out. It is not a concern, because in post (i.e. modifying the video in
Virtualdub and Avisynth) that edge noise will be replaced with a black mask so that it covers up any noise but keeps the 720 x 480 capture aspect ratio (assuming NTSC, adjust numbers accordingly for PAL).
In post, you can use virtualdub filters and/or avisynth plugins to adjust the contrast and color of video, among other things to make it look better, so that the video fills out as much of the video gamut as possible so that it doesn't look washed out or too dark. The "gamut" means either between 16 to 235 when in YUV color space, or 0 to 255 in RGB color space. You can read plenty about this on the forum. It's been discussed quite a lot. YUV is the "TV World" video color space. RGB is the "Computer World" video color space. So, when working with a lossless AVI that you captured, it has a YUV color space (whether it is YUY2, YV16, YV12, or whatever). Avisynth deals primarily in this color space, but also can convert to RGB and work in that space. Virtualdub works in the RGB color space. It takes a YUV AVI and converts to RGB if you are using Virtualdub Filters. So that means it converts from a legal range of YUV 16-235 and translates it to RGB range of 0-255. When done and saving the video back to something like YUY2, YV16, YV12 (i.e. YUV color space encoded), the conversion is done in reverse from 0-255 to 16-235. So you must think about whether you are dealing with YUV (TV) color space or RGB (Computer) color space. And, no, this is not simply chopping off 0 to 16 and 235 to 255 when converting. The detail/resolution of lightness and darkness is not lost or clipped when converting between YUV and RGB. They just use different numbering schemes. So you must know what color space you are working in at all times so you know what limits to work with. Usually, a histogram will show you the legal limits, and when you are crushing things to one edge or the other.
So if you are working in Avisynth with a YUV color space AVI, you can use things such as the Levels command (plenty of examples when doing a forum search) to stretch the contrast so it fills 16 to 235 if you want to utilize the entire gamut. You can do some RGB types commands in Avisynth as well, there you would be using 0 to 255. But you control this in Avisynth by using ConvertToXXXX type functions to make a change to the color space. Some avisynth commands require a specific color space before you can use them. So you shouldn't worry that the color space is changing without you specifying it. If you are using Filters in Virtualdub, they are likely in 0 to 255, because they are RGB. You can analyze video in post with Avisynth with the Histogram command (look it up on avisynth.nl or search forum for examples), or in Virtualdub Filters such as ColorTools. Those histograms either show a histogram including the Y channel (for 16 to 235) or the Red, Green, and Blue Channels (for 0 to 255).
This may sound very complicated, but it is essential knowledge to acquire. Keep reading until it sinks in. Search the forum and read. There's plenty of examples to help you be clear on this.