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
I love stuff like this. One of my favorites is how the did a lot of the video calls in HL2. They literally just had a "set" with the character models elsewhere, with a virtual camera pointed at them as the scene played out.
I love skyboxes in Source Engine games, they're just a miniature floating in a void some distance away from the actual map with tiny low-detail buildings straight from a kaiju film