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The ShadowEdge Physics Engine III is a 3D lighting physics Engine built by L-mod United Kingdom, using many advanced systems primarily in house ATWLS (Advanced True World Lighting Systems) the evolution of the ShadowEedge Physics Engine 2's Enhanced TWLS, the new systems allows for near realistic lighting effects, including light density, lens flares and material light reflection, also the engine features photo-realistic graphics.
some features shown in these images are cloth reflection like the silk red curtain as well as other light bouncing as well as these features will be the key to next generation video games, Rockstar's new improved RAGE will also have these features, so will the Unreal Engine 4 and many more future engines