Just my 2 cp, based on what the books say and what the designers did with 3E, and of course based on simply the nature and presentation of D&D.
1. Darkvision was made to replace infravision because the latter brought up all kinds of complications, being thermal vision and all that. Darkvision is very purposefully simple in description. It says it works like normal sight except everything is seen in black and white, with anything beyond the ability's range appearing as a blank gray void (see the actual text in the 3.0 DMG; in the example, Tordek sees a lightless cavern as though lit normally, except everything's in shades of gray/black/white, and beyond is just a gray haze). The two pictures of mind flayers also shows this to an extent; the mind flayer can be seen just fine with darkvision, even the many little details of its clothing and that clothing's different shading, but it's not nearly so clear as old "black and white" movies. The mind flayer looks decidedly more scary and monstrous in the dark, gritty grayscale of darkvision. {:^D
Distance obviously isn't the determination of black/white/gray shading, it's definately based on the actual colors of things; stuff that would be dark in color appear as darker gray or black in darkvision, and stuff that would be lighter in color appear as more of a light grayish or white shade in darkvision. Some parts of the mind flayer appear just a dark as the far stalactites, and some parts of those far stalactites are just as white as some of the details on the mind flayer. Darkvision doesn't see light and doesn't see sound, heat, or whatnot, nor does it see shadows I think, as a result. Real-world science would dictate that if darkvision were really just super-low-light vision, then the character would be able to discern some limited color, but then it would also dictate that the character would be blinded by sunlight or torchlight (permanently!) if they tried to look in such light while using darkvision.
2. D&D is a fantasy game and its worlds are composed of the four traditional elements (air, earth, fire, and water), the two D&D energies (positive and negative), and their combinations. Matter in D&D is not a collection of atoms and molecules, it's a morass of elemental and energy types melded together. Real-world physics, chemistry, and such do not apply, aside from whatever analogous fantasy-sciences may be chosen to exist in the D&D worlds (such as smokepowder in Faerun, which functions like gunpowder mostly but was created or something by the deity Gond).
Light and darkness in D&D are the interactions of the elements and energies of the six Inner Planes, and these elements and energies are what compose the D&D universes/multiverses. Magical darkness in D&D is impenetrable to darkvision (except maybe in 3.5, but then, I haven't wasted my money on 3.5 and don't put much stock in that edition's quirky rules tweaks) as well as normal vision. Only certain creatures (like some fiends) have the ability to see through magical darkness (which is a force unto itself, definitely not merely the absence of light). Darkvision is a nonmagical extraordinary ability for most creatures who have it, but then, so is certain types of damage reduction, for instance, as well as various druidic abilities like timeless body and a druid's immunity to most poisons. Darkvision obviously operates on seeing something that normal sight cannot see, but still related to light in some way and thus limited in many similar ways (perhaps in the same way matter relates to anti-matter or the relation between light and shadow in the real world). D&D operates on fantasy science, not real-world science, and if you're going to try explaining D&D stuff like Darkvision with real science, you may as well try explaining nonmagical Timeless Body, Rage, Damage Reduction, Poison Immunity, and a realistic evolution for owlbears and griffons and hydras. {:^D
Thus, all those dark elven wizards can read their spellbooks just fine in their lightless abodes of the Underdark, those dwarves can read a treasure map in a completely-dark underground labrynth, and those mind flayers can admire the beautiful Ethereal Tapestry they just took from those pesky adventurers they just brain-feasted upon in their Underdark lair. They can see just fine through translucent veils, transparent glass, thin sheets of vellum, pools of water, and so on.
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