That tool is the Slice tool. It allows you to slice up a design in chunks, and export all the chunks separately in one go.
Tutorial (for web pages; the workflow is identical): How to Use the Slice Tool in Photoshop - YouTube
But how would you make it In a perfect grid?
And what exactly does this do for something like this?
Edit: I found out how to make it into a grid, but why would this method be used for something like what is seen in the video?
Looking at that VERY high resolution of the map example, I believe each map part is an exact 1024/2048/4096/8096 pixel wide and high texture that is loaded up later in the game engine. You can't load up the entire map at once: it would kill the video chip's ram, in particular when other textures must be loaded up as well, so each part is loaded up when needed at run-time.
At least, that is what I would do, and what I can make from this example.
Just watched the video. Okay, so that's MS Flight sim - yeah, makes sense to split it up into separate parts. Parts far away can be rendered at lower resolution this way. And most lower-grade video chips generally cannot handle larger textures than 2048px, or perhaps 4096px in 3d. For example, the 750m can't handle more than 2048px. A modern one like 1080 gtx can handle 16384px ones, but even that wouldn't suffice to handle that example map. So textures are split up in chunks and mapped on geometry.
I am still not quite sure where the slicing comes in though. I saw that in the modeling software he created a grid of polys, but why the slicing? I thought that was just for photography and web design. I thought UV unwrapping was just for the say 4096x4096 pixel maps, how does the slicing play into this exactly? So would the slices be 4096x 4096 or the UV Map, because in the modeling software you'd have to unwrap the area then bring it into PS, but here it looks like the guy took some satellite imagery and just painted using the slices...I'm so confused about this