I'm not sure how to make it or what exactly you want to do in the editors, but I know what it does.
In Skyrim, stand at the base of a hill, then using 'TFC' in the console, pan the camera over the hill. You'll notice that nothing behind the mountain, or out of site of the player renders. It figures out where mountains block your view, so the game isn't loading the ENTIRE map's LOD all at once. It only loads what the player can see, blocking the stuff behind mountains.