Does Granny do any animation level of detail processing?
Yes. Granny has two mechanisms for reducing the number of bones sampled at runtime. The first, Skeletal LOD, is a low-cost heuristic method that is enabled for every model exported using Granny. The second, Animation LOD is a sampling-based method that is more expensive to compute in your toolchain, but is more precise at runtime. Both methods save you significant amounts of processing power.