Out of curiosity, does anyone know how feasible it would be to have a voxel engine that allowed for voxels within other voxels? For example, you would have the usual chunks filled with voxels, but instead of stopping there each voxel could become a chunk of it's own to store more, smaller voxels. The first use case that comes to mind would be for showing damage to voxels, but there could be others, such as smoother terrain. Thoughts?
It's absolutely feasible. Go and look up octrees and KD-trees. These are just two ways of nesting voxels. These were already used in the 1990s in certain voxel applications. You could also use uniform grids and thus restrict the recursion depth to 1 or 2 levels, which may lead to better cache performance with simpler code. Good luck!