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Stands for Level Of Detail. This is used primarily to reduce polygon count in a scene, especially when you have multiple characters like in a sports game. A lower polygon count model of the character is used for when the character is far away, and when the character gets closer, it switches to a different model with a higher polygon count. This example is only two LODs, but you can have multiple LODs to help you reduce the "popping" effect that makes it obvious the character is switching from a low-count to a high-count model. You want to have the least polygons on screen at a time, so there are other factors besides distance... speed it is moving, viewer's anticipated focus, importance of character.