Using this so-called inverse square law for radiation, the Solar luminosity can be deduced. The real trick is to measure the total flux (which is referred to as the bolometric flux). The atmosphere of the Earth only allows the visible and radio (plus some bands in other wavelength regions to hit the Earth's surface) and so, in order to measure the bolometric luminosity of the Sun one must send probes above the Earth's atmosphere. Performing this experiment leads to the value for the Solar luminosity of 3.9x10**26 Watts. This is the way in which other star's luminosities must also be determined. The bolometric flux is always difficult to measure, but the major difficulty is always in finding accurate distances for the stars. This is a terrible problem sometimes as shown by the sources known as the Gamma-Ray Bursters. We currently do not know the distances to the Gamma-ray Bursters. We believe that are either close-by roughly 10's of thousands of light years away, or that they are very distant, billions of light years away. Since their distances are uncertain by over a factor of one thousand, their luminosities (power outputs) are uncertain by over a factor of one million times!!!! They are either normalish objects or they represent some very energetic, perhaps exotic object in the Universe. At this time we do not know which is correct because of the huge uncertainty in their distances.

Information provided by: http://zebu.uoregon.edu