Some twitter rumblings from Unreal dev Karis says it's not vector displacement mapping, one of the repliers suggests it might be (variable resolution) geometry images then because he blogged about it previously ... that seems a bit too fine a distinction to me, but could still be true.
Well, we have to admit there is not much of a difference between vector displacement and GIM, as GIM also is just vector displacement but requiring a bijective parametrization of the model.
IIRC, Karis denied those things, saying he looked it up and spend some time on them, but ended up with something else.
To me it looks like hierarchical mesh reduction, giving a LOD hierarchy of triangle clusters. It would be similar to progressive meshes, but without the morphing to get continuous LOD. With their fine detail, a discrete switch of cluster LOD + TAA is good enough.
Looking at quixel models, they have large UV charts. Maybe they get away with preserving the chart boundaries so the whole LOD hierarchy can use the same texture. Though, such approach can not deal with closing holes and genus reduction without artifacts, so not sure.
Maybe at some point they switch to point hierarchies to get rid of such adjacency problems, but i'm no longer convinced about this. If it's all triangles it might scale better to low power devices with reduced LOD. Or not.
Lots of time has passed but we still don't know anything...
They are both just rendering details ... what is the underlying surface representation is the more interesting question to me.
I'm mostly interested on if they do front to back draw to have occlusion culling built in, and if they do this fine grained (e.g. drawing small tiles to LDS), or coarsely (drawing ranges of depth and updating Z pyramid).
A rendering detail, but more interesting than points vs. triangles.
The ground is actually made of individual leaves, no textures. Yeah, some elements appear a bit blurry, but damn, the geometric density is insane!!
Dreams mostly lacks some close up detail, but in the distance there is much more to see than in UE5 demo. No clear winner for me yet.