Differences Between PixelShader 2 And PixelShader 3
These days, it makes sense to distinguish the shader by its version number; anything lower than PixelShader 3 cannot display new graphics effects like HDR rendering, parallax mapping and transparent water. Among the graphics chips with PixelShader 3 are the complete Radeon X1000 series from ATI, and the Geforce 6 and Geforce 7 from Nvidia.
The most obvious differences in graphics quality between DirectX 8 and DirectX 9 are the increased brightness of light sources, and the improved 3D effects in stone and brickwork; PixelShader 3 also draws water more realistically. Waves have more details, and reflected shadows are distorted across the animated surface.
In Age of Empires III, the water appears transparent when the Very High setting is used, which invokes PixelShader 3; on the High setting (PixelShader 2 and 2.1) the effects are less impressive. Optimizing a game like Black & White 2 for ATI improves the representation of water with the PixelShader 2.1 as well.