What is the point spread function and optical transfer function and what uses are they in image processing
PSF (point spread function) is the spatial domain impulse response of the optical imaging system assuming it's modeled an LSI (linear shift-space invariant) system according to its light intensity processing.

In principle, PSF can obtained by inputting an impulse (varry small bright dot - a point) to the system, and measuring the output response where the dot is typically spread into a blurry circle; hence the name point-spread function.

Also for CRT display systems, PSF can be obtained by sending a single pixel dot signal to the display, and observing its resulting brightness spread on the screen.

Once you obtain the impulse response (or PSF) of an LSI system, then you can mathematically compute the output response of the system to any input by convolving the PSF with the input signal. This concept lies at the heart of the signal processing, and that's why PSF is a very important characterisation of optical systems.

OTF is the Fourier transform of the PSF, and therefore carries the same information, but, stated in frequency-domain instead.