The topic pretty much sums up my question. I have not yet figured out how the gun operates aside from the fact that it creates Portal portals. The weapon description indicates that it deals 250+ base damage, but how is that damage applied to the monsters?
The gun itself is actually not able to shoot, unless you use the skill "Piercing Shot". This is where the damage modifier comes in to play, as it increases the damage done by the "Piercing Shot" skill. As far as I know, that is the only usage of the damage modifier displayed, when using the Portal Gun.