Example implementation of MSFT_lod in glTF-Transform.

generate_lods.mjs

import { Extension, ExtensionProperty, Node, NodeIO, PropertyType } from '@gltf-transform/core';
import { weld, dedup, simplifyPrimitive } from '@gltf-transform/functions';
import { MeshoptSimplifier } from 'meshoptimizer';

/******************************************************************************
 * Example implementation of MSFT_lod for glTF-Transform.
 *
 * ⚠️ NOTICE: This code is provided for the sake of example, and is not tested or
 * maintained. For a full implementation, refer to:
 * https://github.com/takahirox/glTF-Transform-lod-script
 */

const MSFT_LOD = 'MSFT_lod';

class LODExtension extends Extension {
	extensionName = MSFT_LOD;
	static EXTENSION_NAME = MSFT_LOD;

	/** Creates a new LOD property for use on a {@link Node}. */
	createLOD(name = '') {
		return new LOD(this.document.getGraph(), name);
	}

	read() {
		throw new Error('MSFT_lod: read() not implemented');
	}

	write(context) {
		const jsonDoc = context.jsonDoc;

		for (const lod of this.properties) {
			const ids = lod.listLODs().map((node) => context.nodeIndexMap.get(node));
			lod.listParents().forEach((parent) => {
				if (parent instanceof Node) {
					const nodeIndex = context.nodeIndexMap.get(parent);
					const nodeDef = jsonDoc.json.nodes[nodeIndex];
					nodeDef.extensions = nodeDef.extensions || {};
					nodeDef.extensions[MSFT_LOD] = { ids };
				}
			});
		}
		return this;
	}
}

class LOD extends ExtensionProperty {
	static EXTENSION_NAME = MSFT_LOD;

	init() {
		this.extensionName = MSFT_LOD;
		this.propertyType = 'LOD';
		this.parentTypes = [PropertyType.NODE];
	}

	getDefaults() {
		return Object.assign(super.getDefaults(), { lods: [] });
	}

	listLODs() {
		return this.listRefs('lods');
	}
	addLOD(node) {
		return this.addRef('lods', node);
	}
	removeLOD(node) {
		return this.removeRef('lods', node);
	}
}

/******************************************************************************
 * Script for adding LODs to a given GLB scene.
 */

await MeshoptSimplifier.ready;

const io = new NodeIO().registerExtensions([LODExtension]);
const simplifier = MeshoptSimplifier;
const document = await io.read('./in.glb');
const lodExtension = document.createExtension(LODExtension);

await document.transform(weld());

for (const mesh of document.getRoot().listMeshes()) {
	// Generate LOD Primitives.
	const lod1 = document.createMesh(mesh.getName() + '_LOD1');
	const lod2 = document.createMesh(mesh.getName() + '_LOD2');
	for (const prim of mesh.listPrimitives()) {
		lod1.addPrimitive(simplifyPrimitive(document, prim.clone(), { ratio: 0.5, error: 0.001, simplifier }));
		lod2.addPrimitive(simplifyPrimitive(document, prim.clone(), { ratio: 0.25, error: 0.01, simplifier }));
	}

	// Attach LODs to all Nodes referencing this Mesh.
	mesh.listParents().forEach((parent) => {
		if (parent instanceof Node) {
			const lod = lodExtension.createLOD()
				.addLOD(document.createNode().setMesh(lod1))
				.addLOD(document.createNode().setMesh(lod2));
			parent.setExtension(MSFT_LOD, lod);
		}
	});
}

await document.transform(dedup());

await io.write('./out.gltf', document);

https://gist.github.com/donmccurdy/2226332bb58980caebcd21fe7cbca029#file-generate_lods-mjs-L28

https://github.com/KhronosGroup/glTF/blob/main/extensions/2.0/Vendor/MSFT_lod/README.md

ids must be node indices, not mesh indices.

Thanks @takahirox! I've tried to fix the mistake above (this script is still just an untested draft, though), and added a link to your full implementation at the top.