it really depends on the type of object but for the most part, its VERY IMPORTANT.
Good lods on a object can make the difference between a map lagging to hell and not.
If its a high poly object of any sorts, it needs lods, espically large objects such as buildings.
hummm let me see if I can find the lod pics I took the other day for this other guy of my new Sangar.
login stupid msn......
right here it is. Now here is my lod0 of my Sangar, a pretty high 6056 polys, high for a object like this but that's because I've done many things in 3D that would normally only be done in 2D, but this really dosen't matter too much because of the lods which you will see, cut down heviliy on the polys.
also note: lod0 is only seen by high gfx users up close, low gfx users never see this model.
Now here is lod1, 4406 polys, quite a bit taken off of lod0, removing small details etc thou it looks more or less the same. This object was just a clone of lod0 thou then had the details taken off by both hand edits and multirezing etc. Its mainly things like the hesco are sligthly more optermized, the 3D corrugated iron dont have ends to it etc.
note: this is what low gfx users see up close and what high gfx users see from a bit away, how much depends on the object's settings defined by the exporter/coder.
Here's my lod2, 172 polys, a huge reduction from before and is what both high gfx and low gfx users see from around 75m to 100m away. I basically made a new object for this LOD, thou used some bits and edited them from the old one.
Here's my lod3, 42 polys, this is what players see from like 300m +, remember this object draws upto around 1km so you need a object as simple as this to render at distance. from a distance, it basically looks like the same thing just because simply the silhouette of it is more or less the same, apart from there is no windows / shooting holes though it thou at a distance, these would be so small you can barly make them out.
It is also a good idea to look at other object's lods in the editor to get ideas on how to make your own lods, espically looking at objects similar to yours.
To do this all you need to do is load the object in the object editor, then select the lod you want to see:
Hope that helps.