This is partly true. The setting is affecting both distance AND quality.
For example, here are 2 screenshots I’ve taken a few days ago, the only difference is Trees LOW or ULTRA:
If you’re looking at these in 4K, you’ll see the difference of rendering quality:
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LOW seems to be rendering in a 2x2 pattern which is an optimization technique for semi transparent foliage rendering. You can read more about this in the “Game Rendering Explained” chapter here:
My 2070 SUPER 4K settings and suggestions - episode 2 -
ULTRA is rendering with alpha coverage which is better and/or more accurate, but it is also rendering farther and sometimes densier.
The reason it is tied is because this is the way they have designed these settings (bugs apart):
My 2070 SUPER 4K settings and suggestions - episode 2 - #152 by CptLucky8