LBA1 uses Gouraud shaded polygonal characters on top of tile-based 2D backgrounds. LBA2 does the same for indoor areas. For outdoor areas it uses a technique I don't recall seeing in any other game: every time the camera changes position it renders detailed and fully textured 3D scenes to a static background buffer (possibly taking a few hundred milliseconds), then renders the characters on top of that background. The camera changed position automatically, and you could also press a key to force it to re-render the background if you wanted a different camera position. It's a good compromise between real-time and pre-rendered IMO.
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