Motorstorm has some of the best (HDR) lighting out there imo. Much better as a PGR3 for example (precision wise) as it is not so articificial oversaturated that you cannot see anything on screen anymore when coming out of a tunnel etc(which imo also is a problem among many 360 games using the built in low-precision FP10 HDR).
Well it has to do with fine tunning the HDr settings and Motorstorm has well configured HDr. But it is still low precision HDr (8Bit probably) and the sky light banding (an effect due to lower bit HDr precision) is the proof.
I actually seen the same sky lightning banding in a PC game, Armed Assault and it's due to their 8Bit HDr ( hack?) implementation. Setting it to 16Bit removes the sky banding (true HDr) but AA won't be available anymore for Nvidia users.
But i think i remember hearing some dev comments that they sacrificed AA for motion blur (both cannot be applied at the same time.
Motion-blur and AA can be taxing for the hardware fillrate wise.