What exactly is a Skylight in UE4?

I get the impression that they are designed to give some sort of extra, dim illumination on top of that provided by the other light types but please assume I do not know what a skylight is at all. The documentation states, “The Sky Light captures the distant parts of your level and applies that to the scene as a light.” Would anyone like to expand on that? How are the distant parts captured? What is defined to be a distant part? How are the distant parts applied as a light? For instance, if I have a Static Mesh of a mountain in the distance, would that be captured? How? How would that light anything? Does the exact placement of the Skylight Actor matter?

Further discussion of any negatives or ramifications of the use of skylights would be appreciated too.

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I captures bright things like the sky and injects the colour into your shadows. A bright blue sky at midday will give it a blue hue, likewise a orange sunset will make it orange. It affects everything that is not directly lit by another light. If you don’t use one your shadows will be black.
it is also used for mutibounce lighting in lightmass

Unless you have “Capture Emissive” enabled, the Sky Light will capture anything within its distance threshold, which is pretty large by default. If you lower it, anything between the Sky Light and the distance you entered will be picked up as a cubemap and used for diffuse and specular lighting. Placing a reflective sphere in the scene is a good way to test what is captured.

The exact placement doesn’t matter, unless you’re using it with a low distance threshold and want to get local actors in the reflection.

Just like other lights in the engine, it supports the 3 different mobilities, each with their own pros and cons. For most situations, you’ll likely use it as Stationary or Dynamic to get the specular contribution. Both of those options support Distance Field Ambient Occlusion, a large scale form of AO, but only the Stationary version can bake occlusion. Both options will suffer from specular bleeding in interiors, but you can overwrite the sky spec inside with local Reflection Actors, which will blend with the Sky Light based on visibility. Sky Lights also support pre-captured HDRIs for lighting as well. The scene capture is really slow to do at runtime, so no dynamic capturing out of the box, unless you just set up a blend between HDRIs.

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