An increasingly common technique, particularly in middleware such as SpeedTree is to dynamically vary the parameters of in-game entities to create a large possible number of entities with a statistically insignificant chance of repetition. This could be the visible geometry of a tree or person, or the in-game properties of an weapon or piece of equipment.
Various PCG techniques such as pseudorandom number generation can be used to instance the entities, while compressing the total amount of information required to be held by the game for each unique entity.
Instancing impacts the game in a variety of ways: it should be seen as part of a continuum that has procedural generation at one end. The key difference is that instancing modifies game play, whether it be being blocked by the branches of a tree, or being able to recognise individuals in a crowd, to having a game winning object generated by chance. Generating random names for instanced entities can be used to create a sense of 'ownership' of the entities in the player's mind: the random names of soldiers in X-COM:UFO Defense being the most well remembered example of this.
An identify system may be used in conjunction with the instancing to prevent the player completely understanding new instances when encountered, and forcing them to experiment with new objects to determine their function.