LOD is to actually change the texture to another one made (most times manually) to fit perfectly the scene (from distance), sometimes far textures includes non-layered lightmaps, because the texture is low-res and the rendering is faster this way. A good example of nice LOD usage is Oblivion.
I don't know exactly the right terms because i'm not a native english speaker
Some people calls lod everything that change the quality of something according with distance, i don't know if it's right.