In LVP mode there is no need to supply a high voltage to the MCLR pin to start a programming cycle but you sacrifice one of the pins to be able to do it. The pin for LVP becomes the "programming mode / running mode" selector. If left disconnected it will be at an unpredictable voltage and could well leave the PIC in programming mode where it cannot run your code. When you set the LVP=OFF it makes the pin work as a normal input/output pin like the rest of them.
The OSC selection configures the gain and feedback between the PICs oscillator pins. At different frequencies you need different gains to make the oscillator run properly. In RC mode it has low gain and the circuit is configured to charge and discharge a capacitor connected to ground, in LP mode the drive level to the crystal is very low as you would use for small low frequency crystals (example: a 32KHz wristwatch crystal), XT mode is for medium frequency crystals and HS is for high frequency crystals.
There is no fixed boundary between the LP, XT and HS modes, they overlap to some extent. I would suggest the ranges are LP up to 500KHz, XT between 400KHz and 6MHz and HS for 5MHz and above.
Brian.