Level of Detail, sometimes shortened to just LOD, or occasionally lumped in with Draw Distance, is a staple graphics setting which affects the visual quality of objects rendered in the game world.
Due to its wording, it's fairly easy to be mistaken on what Level of Detail actually achieves. Rather than a simple slider which is literally adjusting the level of detail on objects, LOD is related to draw distances and model complexity. Level of Detail is a system used to decrease the complexity of a 3D model the further away it is from the player, or the more oblique the angle. 3D modellers will make multiple models for each objects, ranging from high detail right through to a basic blob or even a 2D sprite for particularly distance objects.
Adjusting LOD alters the distance at which highly detailed objects are rendered in. Low LOD will lead to instances of pop-in, or models more noticeably changing to a higher quality model as you get near them. The higher the LOD, the greater the distance at which high quality models are rendered, improving overall visual quality.
Level of Detail has become a much greater priority since the shift to open-worlds and larger levels. Rendering in these huge worlds at max detail all at once would put a huge strain on both graphics cards and processors, dramatically reducing your frame rate. In this sense, LOD is like a performance safety net. On the developer end, their aim will be to implement LOD culling that is all but invisible to the player. On PC though, where we're often given personal control over the setting, you may notice dramatic pop-in on Low LOD settings.
As a result of this, most games which are linear or small in scale won't have an LOD setting whatsoever. Both Resident Evil 2 Remake and Resident Evil 7 don't have Level of Detail sliders, for example, as the player is never in an environment large enough to make LOD culling a necessity.
Most games will have a universal setting for LOD, although some will have more granular settings for those hoping to fine-tune performance. Gears 5, for example, has separate Level of Detail sliders for Characters, World and Foliage. If grass fading in particularly annoys you then you could up to turn Foliage up, for example, and sacrifice the quality of distance Character models.
Here are a couple of examples to show you Level of Detail in action. First of all, Ubisoft's Assassin's Creed Odyssey. This is a game with huge draw distances and LOD is key. You'll notice on Ultra there are higher quality building models and trees, while objects (such as the statue) and NPCs are culled on Low.
Assassins Creed: Odyssey Environment LOD
The effect of Level of Detail is far less pronounced in Final Fantasy XV, and therefore also far less demanding as a graphics setting. It appears to exclusively affect vegetation rendering and NPC models. Even on Low though, the distance at which vegetation is rendered is quite impressive, albeit with a fairly significant culling of detail at distance.
Final Fantasy XV Model LOD
How demanding is Level of Detail?
Level of Detail will put a strain on your CPU, GPU and VRAM.
LOD is one of those graphics settings whose performance demands can vary hugely depending on how it is applied by the developer. It all boils down to - at what distance does the culling take place? Some games with LOD on Ultra may effectively display the highest quality models for as far as the eye can see, causing a massive performance hit, while others will define more stringent limits, even on Ultra.
Typically, the larger the environments in a game are, the more demanding Medium, High or Ultra LOD will become. FPS impact can be as little as 1% or as high as 20%.
Is it worth enabling High LOD?
As far as graphics settings go, Low Level of Detail is one of the most noticeable things. It's very much a case of diminishing returns as you slide up the scale but, on Low, you can often see objects pop into view just a few feet in from of the player character. In particular, Foliage/Vegetation LOD can be pretty distracting.
With any game, it's worth playing around with the LOD settings to decide how high or low you can get it before it becomes noticeable. The higher the better but, as long as you're not noticeable pop-in as higher quality models are rendered in, it's probably high enough.