Matte paintings are used to create "virtual sets" and "digital backlots". They can be used to create entire new sets, or to extend portions of an existing set. Traditional matte painting is done optically, by painting on top of a piece of glass to be composited with the original footage. However, this trick is as old as Film itself (circa 1911).
Nowadays, matte painting is done in computers with the use of a tablet as a drawing device. In a digital environment, matte paintings can also be done in a 3-D environment, allowing for 3-D camera movements.