Texture Filtering - Negative LOD Bias: LOD is short for Level of Detail, and adjusting the LOD Bias is a method of sharpening details on textures. The LOD Bias controls texture detail by determining when different
Mipmaps are used. Mipmaps are a precomputed series of textures each of a certain resolution used to improve performance. When you look at a surface close to you, a higher resolution mipmap is loaded; as you move further away from that surface, progressively lower resolution mipmaps of it are displayed instead. The default LOD Bias in a game is typically 0.0, but by using a negative value for LOD Bias (e.g. -1.5), you can force mipmap levels to be moved further away, which can improve texture sharpness at the cost of introducing shimmering when textures are in motion. In general, it is better to just use Anisotropic Filtering to improve texture detail, rather than lowering LOD Bias, as there is no shimmering and the performance impact is minor.
The available options for this setting are Allow and Clamp. Modern games automatically set the LOD Bias, which is why this setting exists, so that you can either select Clamp to lock out and thus forcibly prevent any negative LOD Bias values from being used, or Allow it. Unfortunately, Nvidia has explicitly noted in its release notes for the GeForce drivers for several years now that: "Negative LOD bias clamp for DirectX applications is not supported on Fermi-based GPUs and later." In other words, this setting currently has no impact on the majority of games on GTX 400 and newer GPUs; you cannot prevent negative LOD bias in most games.
It is recommended that Texture Filtering - Negative LOD Bias be set to Clamp under Global Settings, and that Anisotropic Filtering be used instead to improve texture clarity. At the moment this will only work for OpenGL games, which are relatively rare. If Nvidia re-introduces this feature for DirectX games, then the recommendation above will remain the same for optimal image quality.
Note: For details of how to manually adjust the LOD Bias value in some games, particularly useful in counteracting certain forms of Antialiasing which introduce blurriness to the image, see the Nvidia Inspector utility covered under the Advanced Tweaking section of the guide.