These are the differences between the four presets available: Low, Medium, High, and Ultra.
Low Quality
Even at Low Quality, Battlefield 3 looks decent. The game uses the same realtime radiosity lighting engine that is used across all graphics presets, so even at low quality, there are tons of dynamic lights, colours reflect and bleed, and high dynamic range (HDR) lighting is in full effect. But the picture, though realistic, is fairly coarse. Shadows are jagged and can look like saw teeth. Textures are blurry unless viewed up close (a higher resolution loads when things get too blurry). And trees and grass look very flat without the rich self-shadowing that's provided by ambient occlusion. Fence aliasing is also very distracting at low quality.
Medium Quality
At Medium Quality, the fidelity and detail is significantly improved. The most noticeable difference is that all shadows are now soft; there are no more chunky pixels to be found. Ambient occlusion is now enabled in the form of SSAO or Screen Space Ambient Occlusion. This means trees and grass cast shadows on themselves, giving them a richer, lusher look. "Antialiasing Post", which refers to antialiasing done as a post process using shaders, is now set to Low. This removes most of the jagged edges in the scene, making the image much smoother.
High Quality
Now this is what Battlefield 3 is supposed to look like. High Quality adds an extra layer of architectural detail on the beautiful Parisian buildings in the Metro level. Windows and columns are rendered with real geometry which in turn cast shadows on themselves thanks to ambient occlusion. Overall, objects and structures look a lot more 3D. Textures are also much sharper thanks to 16x anisotropic filtering. The game is simply beautiful at this point.
Ultra Quality
At Ultra Quality, everything looks better but in a more subtle than dramatic way. The most obvious improvement comes from the 4x MSAA setting which is enabled by default using Ultra Quality. Up until Ultra Quality, all antialiasing is handled by a post processing shader , which though powerful, can miss certain objects. For example, at High Quality, fences and thin lines form crawling patterns when you move passed them. At Ultra Quality, the addition of 4x MSAA removes most of the offensive moiré patterns.