When I first started with UDK I had a lot of confusion understanding the difference between textures and materials.
There are few fundamental distinctions between textures and materials. For example, you cannot apply a texture on a static mesh or BSP geometry. Textures have to be a part of a material. The material is what you would use to texture your environment and apply to Static Meshes.
Here are the differences between a texture and a material in UDK:
Texture is a single file, a 2d static image. It is usually a diffuse, specular or a normal map file that you would create in Photoshop or Gimp, as a tga, tiff, bmp, png file. These can be manipulated photographs, hand-painted textures or textures baked in an application such as xNormals. You would then import these textures into UDK and use it as part of a material. You cannot apply textures directly to objects in UDK. Textures have to be a part of a material.
Materials are made up of various textures combined together inside the Material Editor in UDK. Materials include various textures and material expressions that creates a network of nodes. The final result is a material you can use to apply on your BSP geometry and on Static Meshes. Materials are what you see rendered in-game.
"Texturing" Your Map
So when you hear "texturing your map" or "texturing your environment" in UDK, what this technically involves is using materials created in UDK Material Editor that consist various expressions that include textures as part of that material.
In UDK, you can easily filter by textures and by materials.
Open Content Browser:
Click on All Assets to display all Textures/Materials inside UDK directory:
Under Object Type, Filter by Textures or by Materials:
The Material Editor is a fundamental element in UDK. In order for you to use custom textures and create new materials you will need to learn the Material Editor. That is the focus of the next tutorial.