Question about low poly atlas textures/materials.

Hi,

I wanna get some advice on how I should be handling some of the materials and textures in my current project. I sort of understand atlas textures as images which contain the textures of multiple meshes. And that the meshes UV data would point to the correct part of the image to use. That way different objects can use the same materials and this saves performance, right?

For my project most meshes in the world will be using single colours as for their textures. And I’ve seen people make atlases of block colours so they have a sort of palette texture. And since the meshes don’t need intricate UV setups you can just shrink the UV islands onto a few pixels of this colour block and that’s that. Am I right about this?

I’m attaching a picture of part of my level. Right now the building / window frames / walls / tree are all using separate materials with their own colours and the same material properties (bar the window glass as it has its own material for the transparent effect). But in the long run, once I have many buildings and objects inside them and such, would an atlas material be the best thing to use. In that case, how many colours should I try to fit in this atlas texture? Surely I could have almost every simple colour I need and fit them into this one texture?

Or should I, since my project is for a quite large map with many buildings and objects, analyse my level and see where certain sets of colours are recurring a lot and create multiple atlas materials that, largely, reduce draw calls in different areas.

Wondering about the general thoughts on this workflow.

Thanks
Jack