Unified shadow and lighting is a lighting model. One of its early uses was in The Legend of Zelda: The Wind Waker, a game developed and released by Nintendo in 2003.
Before implementation of unified lighting and shadowing, lighting and shadow information for maps would be static, pre-generated and stored, whereas lighting and shadowing information for characters would be determined at run-time.
Unified lighting and shadowing uses a unified model that generates the lighting and shadows for everything at run-time. This means that any lights will affect the whole scene and not only certain parts. This may include self-shadowing via shadow volumes, where characters can cast shadows on themselves. Today's animation and games use this technology to create highly soft shadows to make the gaming world more realistic