Very true. This is actually the hardest part of modelling, making a high poly model look good at half or even less the number of polygons (as far as 10x smaller) from the original.
I forgot to add, any modern game uses a form of lazy loading, meaning it won't load an object unless is has to (S3D does so too partially). Translate this to a huge single model vs 10 smaller ones, anyone can understand why breaking up models is faster. If sections of the model are not in view, it shouldn't need to load them. It saves precious system memory, doesn't need to access your disk, doesn't need to upload the model from system mem to GPU mem, and so on...
The opposite is true for materials/textures, 4 1024x1024 textures is usually worse than one 2048x2048, but it depends a bit on the situation.
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