As a 3D object gets further away from the camera, it gets smaller on screen, e.g. only covers 3% of the screen.
In that case, it makes no sense to render it at full fidelity. So you use a simplified mesh. You won't notice the difference at that size.
You ship a model at various such "resolutions". Each is one level of detail. You select the level of detail based on the distance to the camera. Helps improve performance, as you do less computations.