I am not sure what games you are talking about, could you give an example? It definitely is not doable in Unity, because there aren´t even tools that allow you to do it in the editor, let alone generate and save a gameworld that huge at runtime. Throw in the fact that you would also have to be able to auto-chunk it for performance reasons. Generating a huge map, fully decorated would crush your RAM and GPU and would be impossible to optimize (runtime lightmap generation?). And let us just add that the team that is going to do this is 18 months into this project and still hasn´t gotten a server login system working, nor has begun working on this amazing new terrain system.
If you show me a game that has done what they are trying to do in a 3D game with a large gameworld, I will quickly admit I am wrong. I have no doubt someone can do it with terrains and minor decorations on a small map.. which is really just an extension of what games like Diablo do with map generation. But to create a large world with caves and stuff. I do not think it is possible.
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I bolded this part because you seem to have just talked right past it. How? How using Unity terrains do you just ´generate´ a cave entrance. There is no mechanism to do that, you cannot even cut holes in unity terrains.
If you could make such a tool, you would be a millionaire on the Unity asset store. The guy from Gaia is getting paid big time for his editor extension that doesn´t even do half of the stuff ToA is talking about, and it only works in the editor.
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That is probably more about RAM. The same thing in WOW when you enter any major city there is an S-Curve to break line of sight. When you enter the walls of Ogrimmar or the statues in Stormwind, you go in, then right, then left, then you enter the city. That middle section inside the wall is added so they can drop Durator from your memory and load Ogrimmar. Games are usually always set up so you only have one major and one minor map in your memory. Having a full dungeon and a full outside area in your memory would give you performance issues.
We also use it because of lighting issues in Unity when doing caves ( even in a pre-created world). it is easy to have lighting artifacts and shadow issues if you can stand at a point and look into partially into the cave, and still see outside world. Halfway through the S-curve we unload the outside world along with it´s lighting.
Edit. Here is the link to
Gaia ( I do not have any part in it, and do not even own it). It has been out for about 6 months and is probably the best selling asset on the asset store during that time by a large margin because it is by far the most advanced world creation system going for Unity. What you should notice... no caves, only works in editor, and you still have to go in and break the terrain into chunks and set up your loading/unloading system to get it to be performant. But just the fact that it creates terrains, textures the terrain and adds plants and objects randomly to that terrain was a huge breakthrough. The best, most advanced terrain creation system that has sold thousands of copies in the last 6 months does not even come close to doing what ToA says they are going to do.