A model gets only vertex lighting from dynamic lights. The material can get some influence from the block below the model.

When you want to use a per-pixel-lighting then you have to use a shader otherwise the light will be distributed polygon by polygon and that will not look very smooth especially with low-poly-objects.

Conitec is aware of that and does tesselation. That means the level compiler breaks a wall into several small polygons just to provide better vertex-lighting but with the disadvantage of producing a higher rate of polygons on your levels.

But this behaviour happens only to blocks and in the future to static meshes.

I personally would like to stop tesselation and rather use a shader for pixel-lighting. This is the present and future.