It actually is in a top down perspective, but what you're witnessing from the treetops that the player can walk behind is compromise. Take a look at picture below:
On the far left, we have the original "grounded" tree. The lighting and shading is able to work within each 8x8 box (or in this case, 32x32, since it's scaled x4 so you can see it easier) without breaking the 4 color limit.
The middle left is what's produced when you decide "I want to be able to make the same tree layer-able," and proceed with getting rid of all pixels that would get in the way with layering with your transparent color, on the outer 8x8 (32x32 here) tiles. But hold on! That introduces a 5th color! Considering I'm strictly limiting myself to the 4 colors per 8x8 (32x32 here) tile, this means you have to cut one of the other colors somehow, someway.
This brings us to the middle right. Obviously, you need to keep the green and black, so that means you can either get rid of the tannish color (highlights) or the blue color (shades). I chose to get rid of the highlights, since that would be less jarring than getting rid of the shading. The lower 8x8 (32x32 here) tiles would still need the highlights though, if you layer the bottom-left half of a tree next to a grounded right one, so I decided to replace any offending green pixels with the brown.
The right is the final result of all the changes, where all the 8x8 (32x32 here) tiles can still stay within the 4 color limit.
Edited by Koh, 18 January 2014 - 07:34 AM.