Tessellation in Metro is used only on character models. That said its use is limited and not done in any way that is worth while. Tesslation makes more sense on more organic items or on architecture.
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Current Gen low resolution In game mesh:
The above image for example is the mesh in game now thats around 8k-11k triangles the SOURCE mesh for the normal map is over 1 billion polygons thats highest subdivided lvl for detail thats used for the above enemy in Gears of War to derive a normal map. Tessellation would allow for that character to hit say 100k when he is in your face mixed with a normal map, that would offer improved Image Quality.
The left is the mesh in game middle left is said mesh with the normals smoothed, mid right is normal mapped far right is color map + normal = example of todays game engines and how it typically works
3 stages of detail in doing normal mapping
The above image is a character sculpt as done for normal mapping far left is the base for in game middle is half detail lvl far right is the finished sculpt. Tessellation would allow us to use the far left mesh as the furthest low rez mesh but wait, with tessellation you can dynamically increase the subdivision patches meaning as you get closer the character gets more detailed. When this is done dynamically it would again eliminate LOD lvls and offer dynamic detail changes that are not noticeable to the naked eye like what we see in games today, with standard LOD meshes.
The pouches, wrinkles, goggles, and helmet are smoothed out a bit, is it super noticeable no of course it isn't. I can say though that it is a step forward, yes tessellation provides better image quality in way today,s PCs can actually handle it. I am sorry but are gpus cant process 30-100million polygons a sec let along billions of them used in source models for normal maps in todays games. On top of that with shit happening on screen physics textures AI etc etc getting it at playable frame rates wont be possible for a long time. Tessllation is a stop gap if you will it offers improvements with acceptable loss of frame rate.
The fact is in games like Gears of War the source game model is over 1 billion polygons for 1 character as you can guess that's not possible in real time today as in nothing can run that in a game environment, most meshes are around 10k-15k some are higher but as u can guess 10-15k 4 sided polygons aka 20-30k triangles are gonna leave flat areas. This is why we have normal mapping which FAKES depth, now we have tesselation that systematically rounds out those areas offering TRUE depth and not faked depth. You will not notice a huge difference again, but its there. Now we can all piss and moan but at the end of the day its progress.
The mesh on the left is what we would see in a game the mesh on the right is the final sculpted mesh that we use to get normal maps from to apply ontop of the low rez to make it look good. Tesselation allows the use of the mesh in the middle with a normal map on top for an overall improved character its smoother it has more polygons it will animate smoother deform better etc etc. It isnt apparent today but it will make its present felt later on.
Another example would be LOD or level of Detail adjustments that game engines do. There's usually 3 or 4 models that are switched in and out as you get closer or farther away, now for 1 minute lets get rid of LOD and add in dynamic tesselation that would make the switch impossible to detect. Think of that for a moment no more LOD no more low rez models magically popping in with higher resolution meshes as u move about. The transition would be seamless that is what tesselation will allow. It will allow the dynamic changing of the entire game world in real time so as to replace LOD it will be a long while till thats the norm but that is the direction tessellation will be heading.
http://forums.3dtotal.com/showthread.php?t=63624&page=3
at the above thread you will see the subdivided lvls of the meshes with all accessories the above mesh hits around 1billion polygons in its highest lvls again something normal gpus just cant do in a game environment which is again why tessellation is important as a tech advancement. To put it bluntly we need to push for tessellation to improve to be used more we need to demand it because the sooner developers harness its potential the better it is for us as gamers.