
Wethersfield, US
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Dick, yes, you have it right. When the flash is in manual mode, the output power is given as a fraction of full power: 1/2, 1/4, 1/8 and so on. Each step is of course a full stop difference. Between those full stops, the power is adjusted in 1/3-stop increments. So 1/32-2/3 would be a power level of 1/32 of full power, or 5 stops down from full power, and an additional 2/3 stop lower, giving a total of 5 2/3 stops down from full power.
In TTL mode, the flash power adjustment is just given directly in stops and is relative to the "correct" flash power as determined by TTL metering, rather than being relative to full power. So if you set the flash to -1 2/3 stops, the flash will output a level that is that amount below what the camera thinks is the correct flash exposure for the scene.
Your D200 can set exposure compensation and flash compensation separately. Exposure compensation affects the overall exposure of the image and thus impacts ambient exposure and flash exposure. That is, changing the exposure compensation will cause the camera to modify the aperture or shutter speed it is using for the scene and may also change the amount of flash power the camera calculates as needed for proper exposure.
Flash compensation simply adjusts the power of the flash. When using an external flash such as the SB800, you can set flash compensation on both the camera and the flash and they are additive. That is, if you set -1 flash EV on the camera and -1/3 EV on the flash, the flash power would end up being 1 1/3 stops below the amount the camera calculates for proper exposure. (In TTL mode, that is. When the flash is in manual mode the camera's flash compensation has no effect.)
Personally, I usually just leave the camera's flash compensation set to zero and make any adjustments on the flash. I find that simpler, and it's the way you have to do it if you use a camera body that doesn't have a pop-up flash since those bodies lack the flash EV adjustment.
I hope that clarifies things. Yes, it's a little complicated, but it gives you a high degree of control over the relative exposure of the parts of the scene that aren't illuminated by flash and those that are, such as in this example, where the background is deliberately underexposed to cause the subject to really pop out:

-- Jon Wethersfield, CT, USA Connecticut High School Sports Photos Attachment
#1, (jpg file)
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