Shading derate factor values

I am wondering how would one interpret the shading derate factor values for PVWatts v1?

It ranges from 0.00 to 1.00, where 1.00 means that pv array is not shaded.
But what about an intermediate values?
What would for example shading of 0.66 mean? That 2/3 of the time during year, that particular pv array is in a shade (from some ?tree, or other nearby objects)?
Or that 2/3 of the array's area through out the whole year are always in shade?

Thank you for the reply.

Thank you for the reply Paul.

I am aware that version 1 is absolete, but it's the most documented one, at least when it comes to all the calculation process. I am trying to understand the v1 calculation first, then I will continue to the newer version.

Would you be so kind to tell me whether the same principle you mentioned, could be applied for PVWatts v1?

For example you said:
"If you include shading in the system loss input, then a shading loss of 34% (or shading factor of 0.66) would mean that shading reduces the system's electrical output by 34%."

Does this mean that shading loss of 34% - basically sets the overall "DC to AC derate factor" (0.77 by default) to 0.66?

Thank you Paul, I a took a look at the PVWatts V5 reference manual you suggested.

May I quote a part from it:
"For a system experiencing shading due to nearby trees or structures, this loss value should be increased appropriately by using external shading software to predict shading losses, or with a onsite survey."

Would it be possible to use some general beam incident irradiance software instead of shading software? For example I would measure the beam incident irradiance on particular PV array with nearby buildings and objects included. Then measure the beam incident irradiance on the same PV array but without the nearby buildings and objects. Then check for the difference between these two measurements. For example in first case I got 1000 kWh/m2, and in second one 1200 kWh/m2. The difference would be 20%. And this would mean that my PVWatts v1 shading derate factor is 0.80? Did I got that right?