Well as you lower the DX level, you take away features.
DirectX 11 will implement Shader Model 5.0. If you run the game at DX10.1 you cannot use SM 5.0.
In a game like TF2, the higher level features of DX9 allow for them to give the more realistic cartoonish effect (it looks cartoonish but still realistic too, kinda like the Incredibles).
As well those features require more Shader Pixles or more processing power. Without them on, they go to a lower level that doesn't need as much power.
Try loading a old game that used DX8 and see how many FPS you get. bet you will get a lot.
Last one I did was Duke Nukem 3D which was DX6 I think on my HD4870. I got something like 15K FPS :O