First was the manipulation of the way light is reflected of the surfaces of the mesh by using an algorithm to smooth the transition of light reflection off the surfaces of one polygon to its neighboring polygon otherwise known as a shader model. Look here for shaders.
The latest technology in this area is Normal mapping or Dot3 mapping, and this is truely what makes Unreal unreal. Normal mapping store the information of a high polygon model and maps it to a low polygon model making the world look as if it is made of millions of polygons when in fact it is a small fraction of that allowing for speed and less over head. This is not just important for modeling or UT3 but the future of gaming in general. Check it out because this is where the future is going! Normal Mapping!

