Hanging miniature is an in-camera special effect similar to a matte shot where a model, rather than a painting, is placed in the foreground and the action takes place in the background. It is thus a specific form of forced perspective.
There are hundreds of instances where a hanging miniature has been used. This is a very old device and when produced correctly it is almost completely undetectable. The chariot race in the 1925 version of Ben-Hur is a good example. Only a very careful examination will reveal that above the wall surrounding the stadium and the first rows of bleachers, there hangs a miniature with moving 'puppet' people that can rise and fall with the human extras. Another cost-saving effect was that of 'flopping' the negative so that only one side of the stadium miniature was built. The main reason for using a miniature in this way is that, unlike a painting, the light on the built set will always be the same as that on the miniature making it possible to shoot in a variety of different 'lights' during the day.