There are two different types of LODs available
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the standard de-tessellation LOD that you already have access to in current ue4 versions
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the whole-level LOD replacement that happens when you tell the editor to bake LOD.
What that 2nd one does is capture the landscape with all the selected buffers, as well as make simplified static meshes for all the meshes in the level. Then you tell it how far you want that LOD to be visible for (most cases you want it to be basically forever).
In terms of how AI handles unstreamed levels that gets pretty tricky. You could keep the AI in a separate level that does not unstream, but if you are saying the AI needs to interact with objects in unstreamed levels that seems like a bad idea. In general special work is required to have a massive amount of distance pawns still active. You could have them go into a state where they do bare minimum work for example. Really depends on the scope of the project and AI needs.