An article by Stephan Rüb.

The Unreal Engine version 4.26 is available and comes up with many new features. This time, the focus is mainly on realism and user-friendliness. Epic Games has once again really stepped up the game with the Unreal Engine. In addition to gaming, many industries such as AEC, manufacturing, virtual production, simulation, virtual training and, most recently, HMI have an increasingly firm place in the Unreal Engine.

There are exciting innovations here:

Charakters:
Real-time hair, fur and feather rendering are fully production-ready as of this release and, by means of the new Asset Groom Editor, provide the ability to make adjustments within the Unreal Engine, as well as compatibility with internal rendering features such as DOF (depth of field) and fog.
Not only is a photorealistic rendering important for virtual characters, of course, but also the way they move. To this end, Unreal Engine now offers the ability to edit animations in the internal NLE tool, by blending animation clips that may contain motion capture data, for example. The editing is similar to existing nonlinear animation editing tools, but just directly within Unreal Engine. In addition, the Control Rig tool has received some updates that can be used in combination with nonlinear animation editing.

Environments:
The believable representation of environments, which is especially needed in the AEC sector, but also in virtual production, is even better with this version of the Unreal Engine.
Thanks to the new volumetric cloud system, skies can now be rendered with a new level of realism. The three-dimensional, fully plastic clouds interact realistically with the Sky Atmoshpere system, as well as light sources such as a Sky Light and up to two Directional Lights. The Sky Light can now also capture the environment in real time to always reflect an up-to-date image of the environment and lighting, and provide more uniform illumination of the environment.
Atmosphere can receive volumetric shadows from objects and the clouds and display a smooth day-night change based on the position of the sun. The new Environment Lighting Mixer also provides the ability to edit all objects that affect atmospheric lighting in one place to quickly and easily create the desired lighting scenes.

The new water system brings with it a wide range of functions and makes it possible to create oceans, lakes, rivers and islands. It works in conjunction with the already established terrain system and automatically interacts with existing landscapes. By dragging splines, the user can create water surfaces that blend into the environment. Other properties of water surfaces, such as the depth, width and speed of rivers, and the strength, height and direction of ocean waves can also be made. A built-in fluid simulation system allows characters, vehicles or other objects to interact with the water surfaces. In order to make the game as fluid as possible despite this realistic representation, the water surfaces in the distance are automatically replaced by simpler objects.

Virtual Production:
Also in the area of virtual production, a lot has happened in this update of the Unreal Engine.
LED volumes or projected areas are getting bigger and bigger and so the requirements for higher resolution and the associated stronger hardware are also increasing. In addition, the Unreal Engine now supports NVIDIA's NVLINK technology to couple two graphics cards together. This creates new possibilities to realize high-resolution real-time rendering in Virtual Production in an optimized way.
With the new REST-compliant Remote Control API, a wide range of functions can be made available via a web interface. For example, the position of the sun, the time of day, or other parameters can be made available for control via an iPad without the person at the iPad having to have programming knowledge.

Offline-Render:
The Movie Render Queue introduced in Unreal Engine version 4.25 also gets an update. The system enables the creation of high-quality and high-resolution images and videos based on Sequencer shots directly from Unreal Engine. This functionality is interesting for all industries, especially of course for AEC and Manufacturing, as it often saves the classical render workflow in an external application.
It is now possible to output a large number of render passes separately to ensure extensive external processing, as is normal in the classic render context. Matte Ids, Camera Motion Vectors, Z-Depth, Ambient Occlusion, Reflections and much more, can be output directly from the Movie Render Queue separately for post-processing in for example Adobe Photoshop, or Blackmagic Davinci Resolve.
Open Color IO (OCIO) is now supported within the viewport and in the Movie Render Queue to work in any selected color space and to ensure the desired display on the respective end devices.
Format support has also been extended. Common formats such as multi-channel EXRs, Apple ProRes and Avid DNxHR codecs are supported. Exporting Final Cut Pro XML EDLs for further post-processing of edits from the sequencer into Final Cut Pro, is now also supported.
It is in this area that the Unreal Engine is becoming an enormously useful and novel tool, while still maintaining compatibility with common workflows.

Collaborative work:

The revised Collaborative Viewer template enables real-time collaborative virtual design consultations. This is possible in virtual reality, augmented reality and from a desktop PC. The updates focus mainly on user experience and performance, allowing more users to participate in a session. It also added support for voice communication between users via VOIP, which uses engine-based peer-to-peer protocols.

This is just a brief overview of the multitude of new features in Unreal Engine 4.26. More information can be found here: https://docs.unrealengine.com/en-US/WhatsNew/Builds/ReleaseNotes/4_26/index.html