A Simple LOD Component is the image a model turns into when it is scrolled away from. The model is 3d however the LOD is 2d. Most designers aviod useing them because the cause the game to look flat and unrealistic. The Simple LOD Component is a .dds file found in the objects main folder. The LOD option can be removed by deleting or editing it with Nifskope and Notepad. To do this one might look at the tutorial How to Fix Reverting Models.