Actually, people don't just "look" bald from far away, I think that they really are bald. When you get close enough to the bald people, you can actually see their hair "pop" on.
I don't really know anything about gaming graphics, but I assume that the developers need to reduce the detail of far away objects to improve the speed that things can be drawn. I just think it's kinda funny that some designer thought about removing everyone's hair to reduce detail.
Oh well. Sorry for bothering you all with my inane blabbering. Now back to the game.