Welcome, Stephen
We too dream of a single simulation world, and Outerra has been built with that goal in mind.
Certainly the platform has to be open to addon makers and modders - we have no intention to make a closed system, that would die off pretty soon. Though, currently we don't focus on this aspect very much as the core system needs to evolve first.
The roads are easy to place, a road can be defined by placing several waypoints and the engine creates a smoothly interpolated road that is nicely integrated to the world, also modifying the surrounding terrain by creating rocky slopes if the road cuts deep to terrain. The asphalt has a physical height and so on. Import from a vector database will be possible as well.

The railroads are a bit different in our system as the geometry for rails will be generated dynamically. But of course it is possible and it will be done once it gets into the plan.
There's no water yet except for a simple water plane for seas.
The rivers will be created in a similar way the roads work, using vector data to carve the riverbeds and a shader for animating the water. I can imagine someone could create an addon for rafting then, for example.
As for the LOD - our LOD system works by computing screen size of a terrain feature, and drawing it (or selecting a corresponding detail level) when it is above a specified threshold. So it's possible to specify a threshold anyone wants, even sub-pixel one.
It's not quite that simple though, because there are also other parameters that affect the rendering, for example several limits for various rendering-related entities because of the limited graphics card memory, that will have to be adjusted too with rising detail.
The shadows aren't limited to objects, basically it's just a question of performance.
As for the towns and cities, we are preparing some test of instancing performance with thousands of buildings. So far it looks good. But we do not need the city rendering for our first demo game so this really should be just a test of the engine in this area.