For a realistic augmented reality view in a mountainous landscape the simulated view needs to show upto 40km in all directions.
Close up, the more detail the better. iGeology3D uses 5m or 10m horizontal spacing for a gridded DTM at the highest level of detail.
Further away the eye and screen can resolve less detail. Halving the data resolution as the distance doubles preserves aparent resolution while minimising the data volumes.
Care must be taken with tiled surface when changing between close and more distant LODs - the edges must match exactly, gaps are very obvious.
Generalising terrain surfaces can give poor results for augmented reality if the skyline isn't preserved. A lot of detail is visible on the ridge lines of distant mountains with sky behind them.