Thanks for the clarification. I am not remembering correctly then. I seem to remember back around the time that some card had a technology to use larger or more detailed textures that other cards did not have at the time. I always thought it was Savage 3D...
That is true, there were video cards at the time that had texture limits lower than other cards. Some examples would be the Voodoo2 and 3, which had a maximum texture size of 256x256. The Voodoo4 and 5 increased this to 2048x2048. Nvidia's TNT had a texture limit of 1024x1024, which was increased on the TNT2 to 2048x2048. ATI's Rage 128 had a 2048x2048 texture limit. There were other cards with other limits, but those are some quick examples.
But while larger supported texture sizes looked good on paper, in practice, they couldn't be used. Both the video hardware and PCs at the time couldn't work with more than just a couple of huge textures without either running out of video memory, or tanking performance. As an example, a 32 bit 2048x2048 Targa image (a format common at the time) would use 16 megabytes of memory in the worst case. That was as much memory as the entirety of video memory on many cards at the time. And since cards didn't have a T&L unit to offload geometry processing from the CPU, larger textures taxes rendering that much more. This is why many games in the late 90s had a maximum texture size of 256x256, part of it was for video card limits, part of it was for practical performance limits.
S3's gimmick with S3TC compression is that it allowed more textures to be used, and larger textures to be used, while using far less memory to do so. Using the previous example of a 16 MB 2048x2048 texture, S3TC could get this down to a few hundred kilobytes. But like with anything, there's no free lunch here. What you trade in memory usage, you lose in quality. S3TC compression is VERY lossy, being roughly equivalent to a bad JPEG compression job. Another problem it causes is with texture modding. Since the source texture is already compressed, modifying the texture further distorts the image. You can only do this so many times before you have a garbled mess.
But S3TC solved a major problem with huge texture sizes, and was widely adopted in the game industry. It's still in use today.