FUD Zilla writes ATI is getting big on the tessellation technique:
This is a feature first introduced with Xenos the Xbox 360 chip, that can subdivide polygons in the smaller ones. Tessellation is a technique where you can subdivide a large polygon into a few smaller ones and this makes objects look more realistic without having to spend too many polygons. More polygons always means more calculations.
In the R600, the tessellation unit with geometry data compression can execute up to 15 tessellations, so it can subdivide for example a terrain in much smaller polygons and add much more detail in the scene. A single triangle can be programmable and divided up to 15 times per triangle edge.
This tessellation unit supports various implementations of tessellation including Bezier curves N-patches, B-splines and most important and much used in off line rendering, NURBS (Non Uniform B Rational Splines). You can subdivide 1,000 polygons to over a million new splines and with a little help of displacement mapping, you can get a very realistically looking terrain. You should take a moment and read a very informative part about it here.