And how much of a hit on resources is it?

Here is a picture of the differences, good luck figuring it out. Looks better to me with this off than on.

http://international.download.nvidia.com/geforce-com/international/comparisons/the-elder-scrolls-v-skyrim-tweak-guide/Skyrim-Tweak-Guide-ObjectDetailFade-Comparison.html

What it is supposed to do is tone down the details of distant objects so they are not rendered. Whether this will help or hurt performance will depend on a number of things. The only thing you can do is try it and see if it looks better or worse. Use FRAPs if you want to see the exact hit on Frame Rates.

However, since this was more of a toggle for those who had weaker video cards at release, it stands to reason that any newer mid range or better video card would not care if this was checked or not. Of course, the shadows that are rendered by the CPU for all these details may have something say about this.