Here are some images showing the first pass on the day/night cycle. I have been using a mobile friendly sky dome system which has worked well. I had to build my own gradient generation tool and update the texture to have the horizon color higher and get the fog color matching as time progresses.
With the sky and fog color in sync for the horizon the chunks and detail models fade in/out with movement. The horizon color then transitions in a gradient to the sky color at the top. This is simple and works well for the art style.
I spent some time experimenting with procedural sky box shaders but they are just too expensive. Even the simplest design is like a full screen effect – expensive shader times lots of pixels.
Next I am going to work on the sunset being a different color – more orange. I also want to get the cloud system working which will be tinted with the horizon color.
And for the tech artists out there here is the custom sky dome gradient texture!
