Volume Texture assets are a new feature that shipped with Unreal Engine 4.21. It flew under the radar because the release notes don't mention the addition of the new feature. Fortunately, there is documentation on how to create and use them. They may not seem very useful at a glance, but they have numerous applications. I'll walk you through how to create them and show you some examples of their use.

But before we get into it, let’s take a moment to learn what a volume texture is. A normal texture is a two-dimensional grid of pixels. It has a length and a width. A volume texture has a third axis, which you can think of as a "stack" of textures on top of each other. So, if you defined a volume texture to be 32x32x16, it would consist of 16 32x32 pixel images packed on top of each other. You can put whatever images you want into a volume texture as long as they all have the same length and width dimensions. This is visualized in the image below - The transparent green represents the volume texture, and the “slices” are visualized as a “pseudo volume texture” next to it.