simply it sets how far in kilometers (Detailmeshsize=16 equals kilometers) trees and buildings, or TOD objects as they are popularly called, start to show, I think that the value is in kilometers anyway, but remember that TOD files cover whole tile which in standard SF maps is 2x2 kilometers so whole TOD shows even if one puts non power of 2 number (example: DetailMeshSize=7 will still render 8 kilometers range as whole 2x2 TOD object will load)
Falcon, the actual density of objects, or more correctly the amount of placed objects that are rendered before cutting their numbers is set by entries in given terrain's _data.ini entries:
[TerrainMesh]
(...)
SolidObjectVertexCount=16384
SolidObjectIndexCount=16384
AlphaObjectVertexCount=16384
AlphaObjectIndexCount=16384
I assume these are numbers of objects and poly numbers as hold in video memory, so on heavily populated maps like Taiwan you can try to doubling these values, when the engine hits the set limitation it skips given objects (or rather, parts of TOD file) from showing on tile
I hope that makes sense