To achieve the detail required by Unreal Engine, the engine also includes a very power material editor. Using a combination of textures, colors and math, 3D artists can create incredibly detailed materials for use in the engine.
As such, the engine already supports long-time so called Physical Based Rendering (PBR) materials. The principle to build such materials is based on basic physics, and result in materials that work very well under varying lighting conditions. This is important, as in such case, it is possible to use the same material, even if the lighting of the scene changes dramatically. Additionally, PBR enables 3D artists to lower the amount of data required to render an object, resulting in more performance and smoother gameplay.
This has given rise to a large jump in quality in the gaming industry, and we are making use of these techniques intensively in our developments as well.