To add:
Before the new DDS plugin was out, you had very little control about the sampling of the mip maps. the smaller bitmaps used a fixed algorithm, which caused considerable blurring. As a result there was a big difference between the close-up, which uses the high res. bitmap, and the all the following mip maps, which were blurry.
You can still see that in the terrain, for example, when you zoom in or pull back, you'll see a "line" moving on the terrain. Above it is very blurry; in front it clearly has much more detail...
As indicated by Smurf, with the new plugin you can define new types of filtering/resampling so that the distant mip-maps are no longer blurry , but very sharp, just as the main mipmap...
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