According to Nvidia's guide there's no difference between levels of terrain detail at the moment. Apparently its supposed to adjust levels of tessellation. As far as I can tell there is very little to no tesselation on most things like buildings. Right now it only seems to be used for water.
I took a look at the rendering.xml file located in "The Witcher 3\bin\config\r4game\user_config_matrix\pc," which lists all the preset differences between graphical settings, and found this:
<Var id="Virtual_TerrainOptionVar" displayName="terrain" displayType="OPTIONS" tags="refreshEngine">
<OptionsArray>
<Option id="0" displayName="low">
<Entry varId="TerrainErrorMetricMultiplier" value="30"/>
<Entry varId="TerrainScreenSpaceErrorThreshold" value="4.0"/>
</Option>
<Option id="1" displayName="medium">
<Entry varId="TerrainErrorMetricMultiplier" value="20"/>
<Entry varId="TerrainScreenSpaceErrorThreshold" value="3.0"/>
</Option>
<Option id="2" displayName="high">
<Entry varId="TerrainErrorMetricMultiplier" value="10"/>
<Entry varId="TerrainScreenSpaceErrorThreshold" value="2.0"/>
</Option>
<Option id="3" displayName="uber">
<Entry varId="TerrainErrorMetricMultiplier" value="6"/>
<Entry varId="TerrainScreenSpaceErrorThreshold" value="1.6"/>
</Option>
</OptionsArray>
</Var>
So it definitely looks like it's doing something, just maybe not what most assumed it was supposed to do.