CryEngine 3 uses a deferred lighting approach that generates lighting information in screen space textures for efficient rendering of complex scenes on consoles and PC. Key features include storing normals, depth, and material properties in G-buffers, accumulating light contributions from multiple light types into textures, and supporting techniques like image-based lighting, shadow mapping, and real-time global illumination. Deferred rendering helps address shader combination issues and provides more predictable performance.