Alright, so I've been experiencing massive framedrops in situations like these

http://www.youtube.com/watch?v=6ZxRaQYGWZc

I've been investigating what exactly is the cause of those. First, my rig

AMD Phenom II X4 @ 3.4 GHz (965 Black Edition)
ATI Radeon HD 5870 (/w Catalyst 11.11, no hotfix)
8GB Ram /w LAA Patch

I run the game on Ultra (1920x1080, no AA, 16x AF) at ~45 fps outside, and on dungeons at ~60 fps [vsync enabled], EXCEPT when I get those massive framerate drops. They seemed to go inline with smoke/fogs effects [although sometimes there is a lot of smoke and I'm getting smooth gameplay], or when I'm "lined up" with the dungeon in a way where I would see the most objects, if walls were transparent. For this test, I went to Broken Oar Grotto, and oriented myself like this. Here are my findings (all results are in 1920x1080, no AA, 16 AF). Things like "fLODFadeOutMultObjects 15-->2.5" mean editing your SkyrimPrefs.ini (located in something like C:\...My Documents\My Games\Skyrim) and changing "fLODFadeOutMultObjects=15" to "fLODFadeOutMultObjects=2.5".

Mid (vanilla) 48-49 FPS
High (vanilla) 33-34 FPS
High (fLODFadeOutMultObjects 7.5 --> 2.5) 45 fps
Ultra (vanilla) -- 20 fps
Ultra (fLODFadeOutMultObjects 15 --> 2.5) 33 fps
Ultra (fLODFadeOutMultItems 15 --> 4.5) 24 fps
Ultra (fLODFadeOutMultActors 15 --> 6) 23 fps
Ultra (fLODFadeOutMultObjects 15 --> 2.5, fLODFadeOutMultItems 15 --> 4.5) 39 fps
Ultra (fLODFadeOutMultObjects 15 --> 2.5, fLODFadeOutMultActors 15 --> 6) 38 fps
Ultra (fLODFadeOutMultObjects 15 --> 2.5, fLODFadeOutMultItems 15 --> 4.5, fLODFadeOutMultActors 15--> 6) 47 fps

Conclusion:
*If you're experiencing massive framedrops and you are playing with "High" settings, lowering fLODFadeOutMultObjects to a "mid" value of 2.5 yields a ~11 fps increase [over 33-34], a 33% increase. Any other settings (shadows, others LODs, etc... will yield marginal FPS gains). Decreasing with any other settings will give you breadcrumbs.
*If you're experiencing massive framedrops and you are playing with "Ultra" settings, lowering fLODFadeOutMultObjects to a "mid" value of 2.5 yields a ~13 fps increase [over 20], a 65% increase [which brings you over the 30 fps threshold]! If you still want more smoothness, try lowering fLODFadeOutMultItems to a "high" value of gives you a 4 fps [20%] increase, or fLODFadeOutMultActors to a "high" value of 6 for a ~3 fps increase [~15%]. Lowering all three settings (to 2.5, 4.5, 6.0) ) gives you a ~27 fps gain, or whopping 135% increase in FPS. Decreasing with any other settings will give you breadcrumbs.

DISCLAIMER
*I very much suspect that the exact FPS gains made depend heavily on the location of your slowdown and the setup you have. These are the results on my setup [see above], at this very location [see linked map], looking in that very direction [see linked map].
*I have not yet tested these changes in other locations that experiences these slowdowns [such as during the Intro sequence, or in Whiterun when looking "inside" the town, or at Bleak Falls Barrow looking towards the Throat of the World], but I suspect they are closely related. [I will update the thread as I do more testing]
*These results are obtained in the conditions which give me slowdowns. These are not average conditions. Meaning that if you are strolling in a dungeon that where gameplay is already smooth and where you don't experience any frame rate drops, it is likely that making those changes will not give you such a drastic boost in performance.
*These findings do not depend on the FXAA injectors and/or ENB series patches. If you have these slowdowns, they are not caused by the ENB or FXAA injector mods [toggling them on/off gave me absolutely 0 FPS drops].

Closing remarks
*I hope Bethesda makes good use of these results and find a way to stop those massive drops in FPS in future patches
*I hope these results help PC users make tweaks appropriate for their setups

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Addendum

Turns out this is not the ultimate solution. It just hides the problem a bit more (for example, it does not help with problems in Whiterun). The real problem in that cave was a torch casting crazy shadows/lighting. Specifically this torch (although others did not help, this one was the worse, costing me ~20 FPS [probably more, since I was capped at 60FPS]):

http://img841.imageshack.us/img841/665/enb2011112945816.png

vs

http://img841.imageshack.us/img841/665/enb2011112945816.png

Reducing the LODs probably means "hiding" the lighting/shadows problem. So you don't run into the problem as soon as you normally would.

This would explain why Whiterun has slowdowns and why it seemed related to smoke. The various braziers is probably causing the slowdowns, as those are the light/shadow/smoke sources.

This seems interesting. How do we change these settings, by the launcher? I am experiencing some big fps drops. Sorry for being a noob and please help me out.

Updated. [Things like "fLODFadeOutMultObjects 15-->2.5" mean editing your SkyrimPrefs.ini (located in something like C:\...My Documents\My Games\Skyrim) and changing "fLODFadeOutMultObjects=15" to "fLODFadeOutMultObjects=2.5".]

It makes me feel good that the lowest my fps ever drops to is 58

This is a great find headbomb! This is just a guess, but does that particular line fLODFade... control at what distance items pop in and out? If it's set at a short distance, do you notice items popping into thin air?

I actually have not tested much while actually playing the game. When standing in that particular position [which I deliberately picked to have the worse framerate possible], all I had in my screen was some kind of open cave. I did not notice anything different on screen, but that was mostly because there was nothing to show. I suspect nothing would change in regular dungeons. With big dungeons like Blackreach where you can see far away in front of you, it might be different. The most noticeable [visual] impact would be in the game world, where you can see stuff from far far away.

Alright, tested things a bit more. This is not the ultimate solution. It just hides the problem a bit more (for example, it does not help with problems in Whiterun). The real problem in that cave was a torch casting crazy shadows/lighting. Specifically this torch (although others did not help, this one was the worse, costing me ~20 FPS [probably more, since I was capped at 60FPS]):

http://img841.imageshack.us/img841/665/enb2011112945816.png

Reducing the LODs probably means "hiding" the lighting/shadows problem. So you don't run into the problem as soon as you normally would.

This would explain why Whiterun has slowdowns and why it seemed related to smoke. The various braziers is probably causing the slowdowns, as those are the light/shadow/smoke sources.

Thanks for posting this info Headbomb, very helpful!

We have very similar system specs, just a quick question: what FPS are you getting in Solitude? (at the entrance looking into the town).
I get around 24 FPS at ~High settings. 30 FPS if I turn shadow distance to 200 (virtually no shadows).

PS. I noticed that reducing the resolution to 1280x720 helped alot in misty areas.

I had same issue (7 fps in such areas when turning to somewhere with shadow, also that damn mouse fps dependent vertical axis...) and fixed it by changing quality of shadows to high instead of ultra, try that. Also with my patch this problem not exist for me any more even with everything set to ultra (gf9600gt 512mb, 3 gb ram, 3 core 2.9 ghz amd athlon).

I can confirm this sudden frame drop in unexpected locations is due to the Shadow setting. I have a 2500K overclocked to 4.5Ghz with a msi twin frozr ii gtx 560 ti and the game runs perfectly outdoors (60 fps) but in some locations the framerate would drop drastically. I noticed it generally happened indoors around many light sources. After playing around I've established that changing the Shadow setting from Ultra to high fixed my problem completely. I run the game on Ultra quality, no AA, x16 AF, FXAA on, Shadow quality on high @ 1920x1200 and I get a pretty stable 60 FPS everywhere.

I have exact same problem, at the same spot and other alike spots. However when I go outside problem just dissapears. It is sad that i cant use ENBseries patch because it doesnt support Nvidia optimus.