You have this level that takes place on a mountain, and the devs wanted to have a spot where you could see the gloomy landscape below with more mountains silhouetted in the distance... except this was the PS2 so it's just two jpegs, one for the sky so you can get some parallax and a curved panoramic one for the landscape. It still looks decent enough 
This era was interesting since you could have pretty detailed character models and environments but still had to use fake backdrops and other tricks for larger environments. Makes you feel like you're on an old movie set
That's literally all of the PS1 Final Fantasies (and X, now that I think about it). Rendering is expensive.
This is different from games with entirely pre-rendered backgrounds where the entire game is just 3D models displayed on top of 2D images. Here you have a fully 3D game where they put up a fancy wallpaper a couple of meters away from the player and pretended it was an expansive vista