Recently I stumbled upon a demo reel in UDK about how one can attain beautiful results using just one (rather tiny) texture that's being sent to the shader pipeline. The famous link is this one.

Basically, the author states that they've used just one texture and give a snapshot of the technique here.

I see that every RGBA channel contains different grayscale information.. and that info could be used to inside a shader to obtain a colour blended output. The problem is that the reel displays a fairly complex scene. To top that, the author even makes use of a normal map. How did they manage to fit a normal map in an already cluttered texture? It makes sense to have a half-space normal map by using only RG from an RGB texture, but what about the rest of the information? Since it was proven to be possible, could someone please explain how it was done (the big picture, not the dirty details!)!?

Here's the texture being used. Click to see in full size.