Our friends over at [H]ard|OCP had the opportunity to meet with Valve and discuss features that the company plans on implementing in their next generation gaming engines.  The goal is to bring a more cinematic experience to the gamer given the massive processing power available with graphics cards now and in the near future:

This is very interesting what Valve is talking about here because this is something you may not have thought of. In gaming graphics, the goal is to achieve a very detailed environment that immerses you in the game, but, at the same time, you must have enough performance to actually enjoy it. Well, what if you could render effects that hide some of the nasty imperfections game exhibit to help increase your immersion in that game? What if you could render fewer polygons and use an effect that still makes the player model appear like he/she is detailed? With the effects Valve is talking about today, this is the goal.

You can also see videos of the effects in action over at Bit-Tech.