Level of detail refers to how much detail is rendered on any given game object. The greater the number of polygons, the greater the level of detail your game objects will have. In order to reduce render times, you should consider what elements of detail need to be part of the 3D model and which ones can simply be included in the texture.
There are also level of detail (LOD) models. This is when you use multiple models of the same object in a game, each with a different level of detail. Think about a game where the player stands on the coast, looking at the horizon. A ship that is 12 miles away does not need the same level of detail as when it is just a few yards away.
