They do.

And that’s completely normal. Every modern game has multiple versions of the same asset at various detail levels, all of which are used. When you choose between “low, medium, high” that doesn’t mean there’s a giant pile of assets that go un-used. The game will use them all, rendering a different one depending on how close to it you are. The settings often just change how far away the game will render at the highest quality, before it starts to drop down to the lower LODs (level of detail).

That’s why the games aren’t much smaller on console. They’re not including all the unnecessary assets for different graphics settings from PC. They are all part of how modern game work.

“Handling that in the code” would still involve storing it all somewhere after “generation”. Same way shaders are better generated in advance, lest you get a stuttery mess. Not to mention that such code does not exist. Human artists produce better results.

Finally automating this is what Unreals nanite system promises to do, but it has ran into snags.