Far Cry 3 is powered by the Dunia 2 engine, a heavily modified version of Crytek's CryEngine. The game looks fantastic, and, more than anything, else it reminds me of the original Crysis (a testament to how ahead of its time that game was back in 2007). Some of Far Cry 3's visual elements may be superior to the original Crysis, though it appears that the environment isn't quite as detailed (this is subjective; I haven't played the original Crysis in a long time). No matter what, though, Far Cry 3 looks amazing. My one nitpick is that some of the animal animations seem to halt abruptly and unnaturally as they transition.
Far Cry 3 employs an advanced light culling system that brings down the overhead of shading many lights, some of which don't necessarily affect an entire scene. The title also optimizes multisample anti-aliasing by only applying the feature to "important" parts of the image, purportedly without sacrificing image quality. DirectCompute-accelerated HDAO and Direct3D 11 TSAA also serve to improve the title's better-looking graphics.
The game has five detail presets, but individual settings can be customized as you see fit. What follows are the options you see when you specify Low, Medium, High, Very High, and Ultra on the Overall Quality menu.
The changes between each detail level are often subtle. However, there are gradual improvements in shadow, geometry, and lighting quality as you go from one end of the spectrum to the other.
One thing you can't see in these screenshots is the LOD transition that happens as you approach objects. The developer chose a pixellated fade between levels of detail, rather than a softer transparency fade (perhaps to help performance?), and it's painfully obvious at times. The following screenshot captures the effect as it happens.
The good news is that this artifact is less apparent at higher detail settings because the transition happens further away from the camera. If you're using the Medium or Low preset, though, you're going to have to live with it.