Of course wait for their response. I'm just chiming in because texture splatting is cool and interesting. (lol)
But I'm fairly certain they just mean, ore and gem "surface" textures. Where it isn't already blended with a rock etc, like the 2nd version of your crystal textures. (which could totally be used as gems already)
To explain there is an alternative to decals, using alpha blending. Called texture splatting (more on this wiki page) https://en.m.wikipedia.org/wiki/Texture_splatting
The example image on that page just uses a simple circle, with a gradient. Which is used to smoothly blend the textures. Basically a height map but it's used for blending.
You can also use any image as your mask. So think like cracks in the rock (zigzag white lines) with blured edges.
Then you'd be able to blend the ore texture onto the rock texture smoothly in the zigzag shape.
You can do this on a larger scale for whole environments. called splat mapping, same thing you just use the r, g, b, a color values instead of just alpha to blend multiple textures.
Yeah, decal textures. A texture with an alpha component, designed to be blended on top of another texture.
It's possible to do by blending with a programmer-provided mask like Deep Sea Ichor Punk suggested, but an artist-provided mask (ie alpha channel) means the edges of the blend end up crisp/blurry in an artist-defined manner, which looks better.
