So I think I may have discovered some things about precombined geometry. That is, the precombines are not actually all that important.
TL;DR: The precombines are important, and on low end systems like the Xbox One they are vital to keeping the game running, particularly in downtown Boston. However, it's the occlusion culling that is really doing most of the work. The reason everyone thinks precombines are so important is that a side-effect of disabling them is that the occlusion planes are removed. However, if you replace the occlusion planes in cells with broken precombines, that will restore most of the lost performance.
There is a mod exclusively available for the Xbox One called Scrap That Settlement. It allows the player to scrap almost all objects inside settlement borders besides larger structures and buildings. For example, in Sanctuary Hills, all the trash, leaves, and shrubs, as well as light fixtures and furniture can be scrapped. However, the structure of the houses, such as the walls, roofs, and car ports, as well as the foundations, roads, and sidewalks, cannot be scrapped. The authors of STS make the provocative claim that the mod is light on performance and does not break the precombined geometry. Moreover, STS covers every vanilla settlement in the game for only a few megabytes, so it clearly does not separate out the scrappable objects and rebuild precombines—a mod that rebuilt the precombined geometry for every settlement would be hundreds of megabytes. The claims of STS’s authors have caused quite a stir because they appear to be patently impossible, and so many heated arguments and much acrimony have followed.
I can confirm that STS works. You can scrap most objects in settlements, and yet it is lightweight on performance. For example, I used a base Xbox One and Rise of the Commonwealth to build city plans up to level 3 in Sanctuary Hills, Red Rocket TruckStop, and Abernathy Farm—the fabled “triangle of death”—with all performance options, such as clutter, animations, and other effects enabled. I considered this a severe stress test, and I did it first without STS installed. Performance was significantly impacted, often dropping into the 20 fps range, and there were frequent loading hitches and stutters when crossing cell boundaries. However, I was able to move between all 3 settlements without the game crashing. Then I installed STS. I can confirm that it barely effects performance at all, and after I spent some time scrapping the trash and shrubs around each settlement, performance may have even marginally improved.
After a bunch of hypothesis testing, I think I’ve finally discovered what STS is actually doing. The mod authors are being misleading when they claim that STS does not break the precombined geometry, because what they are actually doing is restoring the occlusion culling that is normally lost when precombines are disabled. It turns out that, for performance, the occlusion culling is doing most of the heavy lifting. If you use the CK to replace the occlusion planes in cells with broken precombines, the impact to performance is significantly reduced. It appears STS disables precombined geometry for all cells that intersect with settlement borders, replaces occlusion planes in the large structures and buildings, unlinks those structures from the workshop so they cannot be interacted with, and then adds scrapping recipes for everything else. The end result is a scrap mod that is lightweight on performance.
To further test the performance impact of manually placed occlusion planes in cells with broken precombines, XV-Versus made a experimental version of his Mystic Pines Retirement Home settlement mod. He disabled precombines around Mystic Pines and then manually placed some occlusion planes. Using an Xbox One X and the Cheat Terminal mod, I began spawning dozens of settlers and building 100s of objects until my console could no longer maintain its 30fps target when looking toward the retirement home. However, by simply sidestepping behind an occlusion plane, performance was immediately restored to normal. Manually added occlusion planes can definitely provide a major improvement to performance.
There is an ocassional bug that occurs in Sanctuary Hills when STS is installed where one or more of the homes fails to load in. Forcing the cell to unload from memory by leaving the area and then returning will restore the missing homes, but stepping into the space where the homes should be is very enlightening. The occlusion planes remain, and so as you walk around the space where the homes should be, you can watch objects and geometry disappear as they move behind where the walls should be. Precombined geometry is clearly broken, since individual objects, and individual parts of structures, all disappear and reappear independently. Notably, objects built by the player in workshop mode, including objects placed by Sim Settlements plots and city plans, are also properly culled by the occlusion plane.
Presumably, performance in settlements, with or without STS, is at least partly dependent on how the settlement is designed. For example, the city plan for Sanctuary included in RotC is probably bad for performance, because it concentrates most of its objects in the center of the settlement, uses relatively few of the houses, and builds a lot of structures above the occlusion planes. A design which maximized performance would avoid building above the existing houses, would spread more evenly through the settlement, and make more use of each house. This way, you could maximize the number of objects subject to occlusion culling at any moment, enabling you to have a greater number of objects in total.
STS has a sister mod called Scrap That Commonwealth. It is very much like STS, but applies to the entire commonwealth rather than just settlements. When coupled with the Build Anywhere mod, by the same authors, that enables you to spawn a workbench anywhere in the Commonwealth and establish a temporary workshop, STC allows you to scrap anything and build anywhere. Precombined geometry is broken for every cell, but once again occlusion culling has been restored. While you can scrap whole buildings and streets with STC, it's not necessarily advisible unless you plan to replace thems with something else to hide the occlusion planes.
STC reveals both the power and limits of using occlusion planes without precombines. Another popular mod that disables precombines across much of the Commonwealth is Chucksteel's Beantown Interiors. In particular, it disables precombines in most of the cells around Concord. When testing Beantown Interiors, I noticed a decline in performance when approaching Concord. However, when approaching Concord with STC installed, despite all precombines being broken, the framerate never skipped a beat. I believe Chucksteel could significantly improve the performance of BI by replacing occlusion planes lost when disabling precombines. The real test of STC, however, is downtown Boston, and it is here where the missing precombines just prove too much for the console to handle. That downtown runs at all with no precombines on a base Xbox One is surprising, but it is not without constant stutters and hitching, a framerate consistently in the low 20s, and the occasional crash.
Disclaimer: This entire post is highly speculative.