Radiance Cascades PoC

This is a clever algorithm for computing global illumination in real time, for any number of lights. The site shows 2D, but the algorithm can work in 3D, both screen space and world space.

It's based on a penumbra hypothesis — that rays cast for soft shadows either need high spatial resolution, or high angular resolution, but not both at the same time. This means that the storage size for all light probes is finite for infinitely long rays, and that the rays traced at different spatial and angular resolutions can be interpolated and merged without light leaks, as long as the parameters satisfy the penumbra hypothesis.

There's paper that explains it better than my comment :)