That's right, in A7 only models can have LOD steps. Terrain, Maps, levels and sprites can't use external LOD models.
The reason is that in A7 maps and terrain have no defined distance to the camera, as they consist of many different meshes. LOD had to be calculated per mesh, which is only supported for terrain, but not for maps. This was different in A6 where maps and terrain were only single objects.
Sprites have 4 vertices only, so LOD steps makes no sense for them anyway.