many objects in one level/zones?

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What methods are recommended for using many objects in one level ? I tried several methods allready: collapsing everything into one object with AddMesh and using CopyEntity instead of loading the same mesh over and over again.

I remember a code in the archives that stores only the object's coordinates and creates new meshes 'on the fly' when the camera gets in a certain range. Unf. I cannot find it anymore. But would that be a better method?

Here and there I've heard the term 'zones' in this context. What are zones ? Are they 'clusters' of meshes that are hidden/showed when the camera gets near ? What is the idea behind that ?
Thanks for any suggestions.