By setting up the Runtime Virtual Texture (RVT) we can organically blend landscape's/surface's material with material of any asset that comes into contact with that landscape/surface. Unfortunately, as of UE5.3, nanite meshes cannot write/sample RVTs, so by making the static mesh non-nanite allows this to work correctly.
CORRECTION: at 7:56, the second Transform Vector "from world to tangent space", should not be at Landscape Material section, but it should happen after two material blending instead. Furthermore, an additional Transform Vector "from tangent to world space" should be added for other material as well. Basically, Normal texture's space has to be converted to "world space" before blending materials and after the blend it has to be converted back to "tangent space".
UPDATE: the stretching issue mentioned in the end can be solved by setting up the Triplanar material matte, here's a great tutorial by Alex: • Fixing Runtime Virtual...
00:00:00 Foreword
00:00:32 Enabling Runtime Virtual Texture
00:00:51 Setting up the Runtime Virtual Texture Volumes
00:02:15 Creating Runtime Virtual Textures
00:03:36 Applying RVTs to Landscape
00:04:01 Adjusting the Landscape Material to sample RVT from the Landscape
00:06:08 Adjusting the Asset Material to be blended with the Landscape Material by using the sampled RVTs
00:09:07 Blending Asset by applying RVTs
00:09:41 Applying RVT Sampling and Blending to your Master Material
00:12:34 Issue with texture being stretched on sharp Z depth angles - solution is to setup the Triplanar material matte
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