Physics of gamma-ray bursts

The largest explosions that we have observed in the Universe are from the so called gamma-ray bursts (GRBs). They are emitted in connection with the collapse of the central regions of massive stellar remnants, into either a blackhole or a magnetar, and a subsequent development of an ultra-relativistic jetted outflow. Since GRBs typically occur at very large distances they have great potential for cosmology and the study of the first generation stars. However, the necessary basic understanding of the processes leading to the observed gamma-ray emission is still incomplete. I will present the development of the current paradigm which includes emission from the region in which the relativistic jet becomes optically thin, the photosphere. In particular, I will review recent developments in our understanding of the properties of a relativistic photosphere and the diagnostic tools that are emerging from this study.