Skybox
Also said as Sky dome, Cube map, 3D skybox
A giant picture of the distant world wrapped around the camera, usually on the inside of a cube, and drawn behind everything else. It moves with you, so you can never get closer to it, which is how it seems infinitely far away.
It gives you mountains, a city or a whole galaxy for the cost of six images. If the corners or the horizon show, or the ground does not meet it, the illusion breaks.
Say it
“Use a skybox for the mountains and sky, a 2048 pixel cube map, fixed to the camera position. Match its horizon colour to the fog so the ground has no visible seam.”
Where you’ve seen it
Half-Life 2's Source engine adds a 3D skybox: a miniature model of the distant city, drawn around the real level so its skyline shifts slightly as you move.
Not to be confused with parallax
Parallax layers move at different speeds to suggest depth. A skybox does not shift at all as you walk, only when you turn, which is exactly what very distant things do.