I guess what I don't get is why it isn't better to just use RGB as that is what monitors display. OK, I read the Wikipedia article on luma, and I'll quote a bit for anybody else who's curious:
Originally Posted by Wikipedia As applied to video signals, luma represents the brightness in an image (the "black and white" or achromatic portion of the image). Luma is typically paired with chroma. Luma represents the achromatic image without any color, while the chroma components represent the color information. Converting R'G'B' sources (i.e. the output of a 3CCD camera) into luma and chroma allows for chroma subsampling, enabling video systems to optimize their performance for the human visual system. Since human vision is more sensitive to luminance ("black and white") detail than color detail, video systems can optimize bandwidth for luminance over color.
(Emphasis added,
source)