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Sphere is currently the only way to get soft-shadows...

However, as far as I know, they are somewhat faked. I think he simply duplicates the model, draws it black with transparency, and then scales the z down until it's flat, and moves it around so it looks like it's being cast.

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Just wondering where you got this idea...did you make that up?

Sphere uses 2 methods for shadows, one for indoor (point lights) and one for outdoors(directional). Both are forms of shadow mapping.

For point lights, the scene depth from each lights' perspective is rendered into a cubemap, which is then used as a shadow map in the final lighting shader. The smoothing in Sphere2 is done using percentage closer filtering (a different method was used in SPhere1 but was slower and had some artifacts).

For directional lights (sunlight) the shadow is rendering as a back and white mask from the sun frustum, and then projected onto the terrain. A logarithmic distortion field is used to increase apparent shadow resolution.

The shadows run at a reasonable speed on modern cards (GeForce 6 series or better).