After spending the first hour being amazed at the moss in Horizon: Forbidden West I decided to try and make my own velvety moss rocks in UE5.
They seemed to use small foliage cards, much like you would place grass on a landscape but much smaller and tightly packed.
Here's a link to the texture files I created for this: https://drive.filen.io/f/b9676f1e-0f2f-4d59-880d-67c66f891fd5#1Age9QnIw97TU4D2KQ8Gmoc17iNt8Wlv
Video showing the final effect in UE5.1