The only direct consequence of the limit, is that no more segments will be drawn.
However, each segment drawn obviously uses resources to be drawn, and thus the more segments are drawn in total, the less fps you will have.
E.g. in absolutely empty space, you can lower the maximum segments drawn to 0 with no performance gain, as there are no segments to be drawn regardless of the limit, but on a planet[or generally extremely large object], the limit will easily affect performance, as the number of segments there can easily reach the limit.
VRAM is short for Video-RAM, and it is the memory your graphics card has available. I don't expect the max segments drawn to make enough of a difference here to matter, but I don't know your hardware, so I mentioned it.