HooYah Deep Sea
I've heard that when building small scale items, grays and darker colors should be lightened slightly otherwise they appear too dark on the final product- true or false?
Yeah, there is definitely a scale effect, and yes, colors can look too dark on a scale model.
Basically, it's accounting for the effect of diffusing light over distance, that we see in nature. Look at objects outside, and study how things look in the distance, compared to closer up. Think of standing on a hill, looking out over several ridges or hills going off in the distance. The colors of the objects closer to you will be "brighter", truer, than the colors of objects farther away. That's because there's more diffusion, more scattered light, the farther you go.
The distance of someone looking at your model is equivalent to the distance of someone standing tens of feet or more away (I say "tens" because for a 1/48 scale model on a table at a show, it's as if you're standing about 40' away).
So you can adjust your colors, to account for that, and the object will look more natural to the viewer.
I don't do it much, myself, apart from using Tamiya NATO Black for black in small scale, 1/48 or 1/72, for objects made of rubber.