Here's a little theme post about textures

NORMAL MAPS
We know from mathematics that a plane has a normal vector standing perpendicular to its surface. The same is true for polygons, being tiny little triangular planes, but their normal vector can actually be edited. This doesn't change the physical location of the polygon, but it appears to have a different angle to the light. (Light is the key here.)
First of all, you can edit the normals of a polygon to be an average of its neighbours (unified normals), making them smooth together more, or you can give them different normals and the edge between them appears.
As far as I know, Blender only does unified normals and you must physically 'split' an edge to get the sharp snap. Now THIS IS PROBABLY GOOD 'cause I think Oblivion splits the edge any way. So I'm starting to use this method in places.
Now, unified normals do NOT work very well across sharp bends, for instance, the edge of a sword

it just goes lumpy. Remember that normals control the shading, how the surface reacts to light. If normals try to average over a sharp bend, it causes errors, so avoid that by splitting the edge or the normals.
So a polygon has 3 normals, one for each corner. That's fine.
I've modelled that scimitar, and I would like it to be more detailed, like have an embossed plate running up the centre of the blade, but it takes a lot of polygons. The plate won't stick out alot, so I could probably paint it on, but if I paint high lights to bring out the edge, they wont react to the light in the game and the illusion will break, it WILL look flat and painted on.
Now, we put a normal map onto the polygon. Every pixel on the normal map texture has its own normal vector. Before, the sword had 260 normals set in the vertices normal vectors, now it has as many as there are pixels in the map. YAY. The normal map fakes a ton of little surface changes and can make the embossed bump so the light plays along the edge correctly no matter how it is facing. The normal data is stored like this:

the Red channel displays the detail as if lit from the side but in reality it has the X component value of the normal vector. The Green channel is lit from above (y component), and the Blue channel represents the Z component, perpendicular to the page. It is VERY important that the blue channel is fairly BRIGHT, because it means the normals are pointing OUT of the object. If they are dark, they point in, the polygons are 'facing their back' to the light and will become black. This is what gains the normal map its tell tale blueish look, the base for it is generally 255,255,128 RGB.
This is why if you import an object with no textures it'll look black in some views - its normals are all ZERO.
Something else I learned while working on the Madness weapons is that.. a normal map shouldn't be too grainy. It tends to go grainy if we just use a normal map filter on the texture, but a normal map works best if it has larger areas to change, smoother transitions.
The above normal map I edited a bit myself, first I had to round the notches in the edge of the sword, I just painted them channel by channel (use the filter with "normalize only" setting after, it'll clean up your job). Then I had to make the raised platform, which I did by making a black background and the detail I wanted raised in white, ran the filter, and that basically gave me the plate running up the centre. Result in-game:
http://kriscrash.dk/art/2010/dec/scim3game.jpg
I don't know a good way to 'bake' a normal map base to edit on yet, maybe if some of you are into zbrush sculpting it could be used.
Oh! I forgot to say, the Oblivion normal maps "blahblah_n.dds" also contain specular map, I guess I'll get to that when I make one.