3D visuals have largely become the industry standard these days, supported by a host of special tools and engines which aid their creation and streamline the design process.
However, back in the '80s the landscape was a lot different. 2D pixel artwork was the dominant style, but studios often had to create their own tools and hardware to produce them.
One such example is the Sega Digitizer System, which went through three iterations was used an optical pen to permit Sega's artists to craft the visuals we know and love from this period. Many of Sega's most fondly-remembered 16-bit releases were brought to life using this tool, which looks crude by modern standards yet simultaneously manages to maintain an air of "the cutting-edge".
According to former Sega graphic designer "AGE43", the system was based on the System 16 arcade hardware, which meant it could be used with both the arcade system and the Mega Drive / Genesis. The unit was attached to a NEC PC-98 with an hard disc.