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I imagine it like this - the original scene is rendered in bigger squares and AA puts smaller squares around them to refine the edges, so at a higher resolution this would theoretically give a longer, sharper view distance but also would a higher resolution and therefore distance, make everything disappear without a new LOD to match?
Clipping may be easier and I wonder if collision detection is affected.
In some engines there's no collision detection when a material texture has 100% transparent alpha. Has to be some opacity, greater than 127 is the norm.
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