1. Less objects, trees etc
2. Lower quality terrain, more blurred as it goes out from the player etc.
Easier to just try it in the time it takes to type a post. You can easily put it back.
Set scenery on 5, fly, then set it to 2 and fly. Note a lot less things on the terrain.
Put it back to 5, now .
Repeat with terrain setting, set 5 then fly, 2 fly.
Just land based. Terrain and clouds are separate things. There's a separate cloud shadow detail option.