They don't go hand in hand. We are talking about autogen lod distance basically. 

Well aren't the lights part of the roads and streets? So that mean's they should also be lit up whenever a street is being auto generated.

The street lights are separate objects attached to the streets, and have a lower LOD I guess

The streets have a totally different layout generation. X-Plane only knows several anchor points and the type of road that is has to use. Then it looks into the mesh and tries to place a believable road ontpo the mesh, that connects these anchor points . It even has to decide on its own when to put a bridge into the terrain. Only after the roads have been placed the autogen can start and try to place objects between these roads. Among these objects the street lights.