How can I make a realistic sky?

All I have as a sky right now is a flipped plane with a cloud texture (and not a very good one). I was wondering how you can make a layer of clouds before the sky and things like that. Do you just make a second plane with the blue being see through?

You can do it that way, but also do a search for skyboxes, skyspheres/domes etc.

Terragen can help and a program called Skypaint:
http://www.skypaint.com/

There are many ways to make skies.

check out the castle demo. It has a nice skybox.

skybox with animated cloud plane will be nice solution

Yes and then you do something like move the UV values to give the effect of the Clouds moving across the sky.

Buy Terragen and use textures created by it applied to a skybox. You can get it to look like this:



Note: the sun is not part of the skybox. Its a free-floating textured quad and its appearance changes slightly as the camera rotates.

Thanks.