If this discussion seems tasty but confusing, let me clarify. The issue is: which parts of a scenery system are combined when the simulator runs, and which parts must be combined ("baked") in advance.
With MSFS, you can separately install a new mesh, new land class data, new coastlines, and new orthophotos. In X-Plane, all four of those elements must be pre-combined into a single "base mesh". In X-Plane, you have to bake those elements.
This means that you can't make "just" an add-on mesh for X-Plane. You have to create an add-on that addresses elevation and land class and orthophotos and water. Third party authors are quite often not very happy about this - I don't know how many times I've seen "can I replace just the elevation and not the water" posted in forums.
But the Orbx team brings up the exact reason why I thought (five years ago when designing DSF) that requiring all of the elements would be okay: often if you replace one part of the scenery and not another, the results are inconsistent. If you move a coastline but don't adjust the mesh, you may have water climbing up a mountain. If you move a mountain but don't adjust the landuse, you may have a farm at a 45 degree angle.
Cake and Pie
Not everything in X-Plane is pre-baked. As of X-Plane 940, you must pre-bake:
- Land class
- Wide-scale orthophotos
- Terrain Mesh
- All art assets (E.g. change or add types of buildings, replace the look of a given land class for an area).
- All 3-d (forests, buildings, airports, roads*).
- Small area orthophotos
* Roads are sort of a special case in X-Plane 9: you can replace them with an overlay, but the replacement roads must be "shaped" to the underlying terrain mesh, which means they won't work well if a custom mesh is installed. This limitation in the road code dates back to X-Plane 8, when most of us had only one CPU - pre-conforming the road mesh to the terrain shape saved load time.