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I'm sorry for being so hostile, its just really frustrating to know something, and see someone else touting it as a sharade. But now as people read through this thread, they will come to their own conclusions, and the fact that a few people believed it was actually pre-rendered is really the best compliment. Yes the viewing distance was up to 10 kilometers (which is where it is set for me) in arma. I can only imagine it going higher from there. And the foilage and forests are derived from an inhouse technology called Linda which quite accurately models many of the possible variations of vegetative infrastructure.

Trust me, and the others among the "ArmA 2 Defense Force" any videos that advertise Arma 2 are guaranteed ingame.