That's DXT compression, it works on a 4x4 pixel block basis for compressing. Any sort of gradients or colour changes will come out looking blocky (notice the edges of your indented circle in the bottom left there, for instance). These issues cannot realistically be avoided when using DXT compression, however you will…
Hello there polycounters, I've been trying out UDK today, and I'm loving it so far! Now I've tried to import my (subdivided for UV-tiling) plane with normal maps and the lot, and the first snag I really ran into was an issue I've had in the past with normal maps. What seems to be compression artifacts. At first I was…