If you can find a copy of Portal Runner and play the game, you'll see that it used an over-the-shoulder perspective. When you're playing, you seem to be hovering in the air slightly behind the character you are controlling. As your character moves around, you see the world of the game stretch out into the distance. But what you are really seeing is a very clever illusion reminiscent of the backlots of Hollywood.
The world that the character actually interacts with in Portal Runner is a very defined area. If you could pull the camera view up in the air, you would see that the play area is completely self-contained. Other parts of the world that you can see in the distance are actually two-dimensional images mapped onto a flat surface that surrounds the play area like a barrel. The sky was created in the same way, by mapping the sky image onto a large dome or cylinder that fits over everything else. Look at the example below to get a better idea of how this works.
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A production team constantly looks for ways to add realistic effects without degrading the performance of the game. A good example of this is the reflections of objects on shiny surfaces, like the chess board in the medieval world of Portal Runner. The chess pieces and characters moving around on the chess board appear to have detailed reflections on the polished surface of the chess board. What's actually happening is that a second version of each object is positioned upside-down just below the semi-transparent surface of the chess board. The upside-down version moves in concert with the "real" version of the object, providing an illusion of reflection.