LÖD is short for "level of detail". When you move farther away from an object, the level of detail (or the amount of polygons) goes down. This is an optimization, because at long distances you can't see the difference, thus putting less strain on your video card (and your CPU, in the case of JA). Also, if you lower your model quality option, the level of detail goes down too. It is highly recommended that your model has LODs.