Level of DetailEdit
Chris Bergmann, Auran chief programmer:
"A decent rule of thumb might be that each lod should shave off at least 50% of the polygon detail, and that LODs below ~500 polys are not worthwhile unless you expect the item to be static and present numerous times in the same scene. (For example, a tree or generic house.)
More LODs means more memory usage and more CPU/GPU time in order to swap the LODs in and out as appropriate. You want to make sure that the time and memory lost in LOD swapping is more than compensated for in the polygon savings. Small polygon gains just don't make sense in this light."
This forums.Auran.com thread contains a lot of useful information about the different methods of lod and when it should be used:
Subpage name: When to use lod