How does LOD work with level streaming?


I’m pretty new with UE, so please bear with me. The project I am currently working on is to create a big open world city.
Our art team is creating all kinds of models with Maya, like skyscrapers, cars, street lights, and so on, and we want to do the actual compositing in UE.

But before we start with this I would like to setup the basic things we need for an open world, I already did some research on how to do this with UE, and read about the world composition feature and level streaming.
Then I set up a small test project with 9 maps in a 3x3 tile grid, each map has a simple cube representing a building and a plane representing the street. I also added those maps to a layer and configured the streaming distance so when I run around I can correctly see maps appearing and disappearing.

Now the thing I simply cannot wrap my head around is this: I don’t want my maps to completely disappear, I want them to switch to a less detailed version of the same map. E.g. a map containing a high-poly skyscraper, street lights and trees should switch to LOD1 without trees or street lights, then to LOD2 with a more low-poly skyscraper and so on.
I also found this thread How do you create manual LOD for landscape in World Composition using your own meshes - World Creation - Epic Developer Community Forums, where they explain how to manually add LOD levels using the _LODx syntax, but what good are these? I cannot see them in the level list, and I found no infos on how I can actually fill those LOD levels with low-poly static meshes.

I think I am missing something here, can anyone help me with this?