Lets assume you have a wall that is juts 4 vertexes, how you gonna blend that?
It'd be like if you had a terrain block with only 4 verts. Each corner could have the blend effect applied on it, but it would influence the entire quadrant of the mesh in that corner.
I wonder how it works that you have one material? I mean you have multiple ones like with the terrain.
It looks a bit like the megatexture approach where you can paint it like you want and in the end it gets baked to one megatexture.
Sort of. You're still only using one actual material. As with the video, they weren't swapping back and forth between brick, water and sand. It was one material with multiple diffuse, normal and spec textures, each set associated with a vertex color value. You paint blue on the vertex and it blends the default texture with the sand texture for example. So you're only using one actual material, and you don't actually bake anything into a final texture, it's handled runtime in the code.