Direct3D10 finally completes the break from the legacy fixed-function pipeline. Developers will use the programmable pipeline to emulate the older, fixed-function steps. Additionally, Microsoft had to rethink its display driver model now that the entire desktop is going 3D. The video card isn't just for games anymore. When you have a 3D desktop and give each application its own 3D window, the display driver has to be flexible and stable enough to handle the video card's increased role in the system. Microsoft split up the display driver to increase stability, to ensure that the 3D desktop stays up in the event that a game or another application crashes due to a graphics error. This change also means that Microsoft will not release DirectX 10 for Windows XP, because many of the Direct3D10 improvements will need the new Windows Vista Display Driver Model.
If this is DirectX 9, imagine how Unreal Engine 3 games will look in DirectX 10. Opening up the video card to more applications will require Vista to give the GPU more system resources and allow applications to share the hardware. The biggest change for game developers will be virtualized memory for the GPU. The video card will now have its own space in system RAM to store information that can't fit on local video card memory. High-end video cards ship with 256MB or 512MB of memory, but games can still use the extra space in system memory to store large chunks of information, like textures.
Epic Games founder Tim Sweeney explains, "Virtual texturing eliminates the video memory bottleneck on texture size; whereas in DirectX 9 the size of textures we can use with full performance is limited by the amount of video memory, in DirectX 10 it is only limited by total system memory." Furthermore, Tim predicts that virtual memory will enable a "2X-4X increase in texture usage in games, which will be great for Unreal Engine 3 games, where textures are often authored at very high resolutions like 2048x2048, and then scaled down on lower-end systems to improve performance."