We call it "Blue Boxing" at our studio, but that's only because the grid texture we use is blue. Basically its just blocking out a level/environment with primitives with a grey grid texture applied to it, and you end up getting a bunch of grey boxes around the place, thus the name. Its a quick way to prototype a level and get it into the game for play testing. You can quickly determine if the level is going to be fun, if the scale is right, will it be balanced well, that sort of thing. Its great for blocking out geometry to see what shapes will work really well. Think of it as a 3D sketch for an environment.
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