What does the Landscape Physical Material Output node do?

2 different things entierly.
You have to do both to get good performance.

Optimizing the material for performance will involve several things.

  1. Using UV for all the distance blend, because it’s way, way, way cheaper than blending the whole material layers.
  2. limiting the samples and layers amounts, on top of using packed textures.
  3. removing or limiting height blends. Or setting them up manually - off the packed texture. Doing your own can be a lot cheaper.
  4. Doing your own material layering instead of using the layer nodes. Much more performant if done right.

Side note:
Tessellation can’t be turned off, so leverage it as much as possible.

Overall you can see a difference of over 20fps at 4k on a 1080ti going from the tutorial material everyone starts with to an optimized one…

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