Your Chain Lightning spell now strikes 2 additional targets, but deals 10% less damage.
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Chain Lightning's initial hit deals 100% of the damage, its second hit 70% and its third hit 40%. In total, Chain Lightning can do up to 210% of its damage.
Chain Lightning's initial hit receives 51.8% of your spell damage. It is not affected by any AoE reduction.
All three hits are calculated individually. As such, it is possible (and fairly common) that only one or two hits critically hit.
Chain Lightning has a fairly high chance of triggering [Elemental Focus] (elemental spec) due to hitting multiple targets.
Be careful when using this spell if more mobs are nearby that aren't meant to be aggroed. While Chain Lightning may be more tempting to use for its lower cast time and higher damage output, it can easily cause adds.
Patch 2.3.0 (13-Nov-2007): Cast time was reduced to 2.0 (from 2.5), mana costs reduced, benefit from spell damage reduced appropriately.
Patch 1.6.0 (12-Jul-2005): Chain spells cast on PvP targets by an unflagged Shaman will now properly bounce to other PvP targets.