As an introduction to Tech 5 Carmack shows a quick demo loop of Rage in action, showcasing the texture work and graphical direction created entirely with Tech 5. The program, which is being developed hand-in-hand with Rage, focuses on what Carmack calls a "megatexture," which is essentially a term for the ability to mask an entire world with a unique, non-tiled texture system.
A developer can model the world, free-hand an entire massive piece of art, and lay it over the world itself, freeing up the processing power that goes to loading textures and pushing general graphical limits on the fly. From there developers can go into a new id-developed tool and work in a layer-based program to add unique features to their megatexture, clean up specific or entire chunks of the world, tweak bump/normal maps, and improve on the overall graphical output of the game.
Find a high res version of this video at gametrailers.com