In truth, lots of models from Asobo and Microsoft use only one LOD.
Honestly, I have played around with optimization a lot and LODs don't seem to make a big difference (On PC, at least) unless the hardware is really struggling. When I test on Xbox cloud, it does get fairly stuttery if I have a lot of heavier geo objects with no LODs or a single LOD. I'm getting ready to test a new library update on Xbox in a week or two and I'll be interested to see how my new approach is working. Basically now I am just following what the MSFS LOD Limits debug tells me. If the vert count goes into the red, I create a new LOD and then repeat until I can get it to 5% vertical screen space, then I make a really low detail LOD with only vertex colors (unloads textures much earlier - eases load on GPU for distant objects). In the case of vegetation, I have started doing an invisible cube for the Last LOD (or a plane if the LOD0 model is wider than it is tall). As soon as the vegetation is no longer visible on screen, I switch to it.
It's a balance. If the GPU is struggling, you do LODs and push some of that load onto the CPU. I think a good rule of thumb is to just do the least amount that is required. Meaning, only do LODs if they are actually needed and if you do, transition the LODs at as small of a screen space that you can get away with (per the debug - Just before or as the vert count turns yellow) and be sure to not transition between the LODs too quickly as well. Reduce the vert count as much as possible without causing a noticeable pop and remove complete materials if able. Then you are making the biggest difference using the least amount of LODs possible.
I used to follow the SDK optimization guidelines word for word, but they leave a lot open to interpretation and it sets a bad precedent making you think that
ALL models should have multiple LODs. A 300 vert model having 3 LODs is only putting more load on the CPU for nothing. The GPU barely notices the model. They also tell you to remove textures you don't need at a distance (such as the normal map), which I have previously taken as having a new material for each LOD and removing the appropriate texture slot.
If multiple LODs of a model use the same material, it is instanced and doesn't have to reload, but if it is different, each time a LOD switches for that model, the material and textures are called again. Do that a few hundred times across multiple models in a scene and you still probably wont notice it on a decent PC, but on Xbox, it will run out of memory and crash quickly (Found out the hard way).
At this point I'm really just trying everything and seeing what does and doesn't cause Xbox to self destruct. Trying to find the best balance across the board, because no matter what it will always be different for each project.