Wow this tessellation thing is pretty cool

[Modelworks]

I was under the impression tessellation just made life easier for devs, rather then allow for more poly's at a lower cost to performance.

It isn't going to make the game performance faster , you are still going to have to deal with the new triangles that are created by tessellation . I make a lot of models for game engines and tessellation is both good and bad for me. Good is that I no longer have to make 3 models for every game model for the LOD, high, medium ,low . The game engine can increase detail based on hardware capabilities with me only supplying a base model. Bad is that tessellation from a base model can be tricky . Some models look great tessellated one way and to a certain limit, but when that limit is crossed or tessellation is changed to a different method the model can deform, distort, triangles start popping out, textures change.

The next thing that gaming really needs to make tessellation stand out is Ptex. The way texturing is done currently is with a map. You take a surface like a cube, unwrap that to form 6 sides and those 6 sides are mapped to an image for the cube. You can subdivide the faces of the cube but cannot move the corners , these are called boundary points. The image map is tied to the boundary point vertexes. If you start tessellating an object you have to make sure you do not move these points or the textures will mess up. This is where PET comes in.

Ptex is per face texture mapping , you don't have a large map for the entire model but each face is it's own texture. This also allows detail that could never be done with just a single map.
http://www.disneyanimation.com/library/ptex/