This slide from AMD's presentation to media shows their views on the GT200-style of building GPUs - a method that both NVIDIA and AMD/ATI have been using for years.  The idea was pretty simple to follow: design a large chip with as much processing power as possible then scale it down for mid-range and budget products by making smaller, less powerful versions of it. 

AMD, obviously trying to make their alternative method more appealing to customers and investors, points out some potential drawbacks to this method that all revolve around the design process.  When building a larger monolithic chip NVIDIA (and ATI's previous designs) had difficulty managing power requirements for their high end parts - just take a look at the max TDP that the GeForce GTX 280 has to see proof of that.  However, as you can see below, AMD's solution is to use multiple-GPUs on a single board (or on two cards) for the same level of performance, which again puts similar power requirements on the customer's system. 

AMD also points out a 6-12 month lag time to develop those smaller, cheaper, less power hungry versions of the chip; this is very subjective though and depends greatly on the design team's focus.  The potential of having to use larger chips for smaller and slower parts is pretty significant - remember the days of NVIDIA and AMD both having GPUs that could be "unlocked" by end users since NVIDIA had to take a chip that was "good" for a higher end part but use it for a lower cost card that need inventory. 

AMD is moving in a different direction with their GPU technology and are instead building a design that is smaller and will scale both UP and DOWN to meet different price segments.  The RV770 is a svelte 956M transistors and being built on the 55nm process at TSMC gives them a pretty significant edge in die space.  This design style was created with the RV670, but we have to wonder if it was done so with intent or due to their inability to go the other route.  Would AMD have preferred to build RV670 or RV770 as a larger, more powerful die if they could keep power consumption at reasonable levels?  I tend to believe the answer was 'yes', at least on RV670, and that AMD instead made the best of their situation.  Perhaps then RV770 was perfected when AMD saw the benefits of those decisions to create the design style we see above. 

From a high level, the RV770 is pretty impressive when compared to the RV670.  Both are built on the same 55nm process but the new RV770 has 44% more transistors yet claims performance benefits at 2x and 2.5x in various areas.  Most notable are the increases in texture units (from 16 to 40) and shaders (from 320 to 800) that should offer significant increases in GPU performance.

As part of that increase in performance AMD is claiming to have met 4x increases in both performance/watt and performance/mm^2 of die size in just about a year when compared to the Radeon HD 2900; remember though that the R600 was notoriously bad at performance/watt.

Here you can see a side-by-side comparison of the RV770 die (on the left) and the GT200 die (on the right). 

What is that 260 mm^2 made up of?  You can see in the overlaid diagram seen here how each set of features, that we'll detail below, consumes die space.