Direct 3D resolutions

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Original post by BEHOLDER192875 Does it convert all textures into the new format when rendered? I have all my textures set to A8R8G8B8.

Effectively, yes.

The actual texture in memory isn't (usually) changed in any way for different modes, but the texels read from the texture are [effectively] converted "on the fly". There's no performance hit with this, so you don't need to worry about it.

I believe it's the final write to the frame buffer that's converted. All mixing in the texture stages is still done at full precision. This means you can keep your textures as 32 bit (or just some of them) to take advantage of the better blending, while the output is 16 bit color. If your concern is memory bandwidth or memory usage, you may want to drop many textures down to 16 bit. Ensure you leave yourself a way to tag certain textures are remaining 32 bit. Play testing is the best way to determine which textures need their full color range, but in general, anything with a slow smooth gradient will likely require all it's color bits.

DXT textures are also a great way to reduce video memory consumption - they are unpacked at the rasterizer. You'll see a quality drop, but for basic texture usage, this is usually acceptable.