Draw distance is a computer graphics term, defined as the maximum distance of objects in a three dimensional scene that are drawn by the rendering engine. Polygons that lie behind the draw distance won't be drawn to the screen.
As the draw distance increases more distant polygons need to be drawn onto the screen that would regularly be clipped. This requires more computing power. This means the graphic quality and realism of the scene will increase as draw distance increases, but the overall performance (frames per second) will decrease. Many games and applications will allow users to manually set the draw distance to balance performance and visuals.
Read more about Draw Distance: Problems in Older Games, Alternatives
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