The question what exactly the Mipmap detail level slider in AMDs Ati Catalyst drivers has been asked quite a few times. And while not being able to take a look into the inner workings of the Catalyst Control Center, it is certainly possible to make the effects clearly visible.

The following shots were taken from the D3D-AF-Tester with my trusty HD 4650 and (then most recent) Catalyst 10.6 WHQL drivers. There's little doubt that either driver revision nor differenz graphic card model would change the effect of the Mipmap Detail Level slider.

Mipmap Detail Level: High Quality (best possiblity)
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Mipmap Detail Level: Quality (third worst possibility)
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Mipmap Detail Level: Performance (second worst possiblity)
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Mipmap Detail Level: High Performance (worst possibility)
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As you can see, the visual outcome is effectively moving the LOD-bias for the Mip-Levels into the positive range, thus making textures more blurry. A little bit of an exeception is the High Performance setting, since it mostly leaves the higher Mip-levels (colored green, blue, purple and so on) alone but instead prevents the base texture from being used at all, using the first Mip-Level (red) for a large portion of the screen.

While adjusting the LOD bias this way can eliminate texture noise, it also eradicates fine grained details and thus is not recommended. It's basic performance impact manifests itself in a higher hit-rate for texture caches, since the Mipmap-Levels of textures themselves are smaller. On current GPU-products this only produces a minor performance gain if it is measurable at all.