Before placing a single light in 3d software, it's good to spend a while, looking at the scene, and thinking, imagining a bit. The assignment is pretty clear - fog/mist (damp), at night - that's the 'prime directive'. But that is not all that matters. Composition of the image is important, regardless of the lighting scenario we have to achieve - and that too can influence light placement, strength and color. Visual style and art direction is important also - is it supposed to look real, photo real, stylized? Finding some reference can suggest a few ideas about how to achieve our task. It's also good to think about the technical aspects - is it going to be a still image, or is it for animation, should it render really fast, or maybe we have some computing power at our disposal? But nowadays, when the computers are fast, it's not always that important.
So how does all that theory work in a real life case? Let's take a look at the viewport capture (Fig.01) of our scene. First important things I noticed, were the lamp (marked red), and cobbled street surface (marked red, as well). The street would be a great tool to suggest the dampness, while the lamp would make a nice main light source, especially if it could cast a highlight on the road surface. That lamp would not be enough, so I've decided to suggest more lamps along the street, just behind the archway (that should give us a nice depth in the image), marked blue. Also, I decided to light up some windows. But which ones should I choose? The square one facing the camera (green), or one of the two on the right side (orange)? I don't want any lit windows on the walls facing the camera (marked violet) - that would break the composition that's starting to form in my head, by leading the eye towards the edges of the image.
That still does not cover all the light that should be in the scene. We need some ambient lighting, to suggest we are outdoors. I don't mean ambient settings in the 3d software, but rather the light coming from the environment: sky, moon, distant city lights, that kind of thing. In our case, it should come from above, and slightly from the front. The way I see it, artificial lights should be warm, the ambient neutral, or slightly cold/blue. The final tuning of that balance will be handled in post-production. And we need the fog - this is crucial, without fog all the above would give us a clear night after the rain.
To render the scene, I'm using 3dsmax with Vray. Recent releases of Vray contain a very nice tool - VrayEnvironmentFog. Its main advantage over standard max fog is that it reacts to the light sources, just like real life fog. That means we won't have to fake it by using volume lights and old-style fog - we will work with lights, and let Vray handle the heavy lifting of providing the atmosphere. Note of caution here. While VrayEnvironmentFog can produce very nice images, it also can take a long time to render, especially when there are a lot of light sources, not mentioning the GI. For now in the initial steps it can stay off, we will add it later on.
First thing I usually do, is set the Color Mapping to Exponential (Fig.02). While this isn't probably the most physically correct way, it has some advantages. The way it works, is by preventing over bright 'hotspots', and oversaturated color transitions. It's also very tolerant - it's really hard to whiteout the image, and the lights have a very wide range of usable multiplier/strength settings (but that range often ends up being pretty high, like 512 or so, especially with the fog on). It has downsides, too, making the colors look desaturated, and decreasing the contrast of the image. I actually like it that way, because I can easily bring back the contrast and saturation in post production, and for some scenes it just fits - but if you don't like it, there's HSV exponential mode, which better retains the color. Generally though, I mainly use the default setting with Linear Multiply for rendering some additional passes such as masks.