Duncan Lawler, Principle Development Lead for Virtual Earth 3D, (also has the glorious esteem of sitting across the hall from me) has posted an article on MSDN explaining how VE3D works in more detail. If you're interested in VE3D you should definately read this. The article goes into detail about how we were able to put all of this data in a browser, versus a thick client, with ample performance and controlled bandwidth.