Even with max settings, in the current game shadows on character models looks absolutely awful 90% of the time, makes the game graphics look alot worse then they realy are sadly, and it very much does distract from me enjoying the game at times.
Like others said for example showing of the game to a friend trough screenshots will make them ask "why are the graphics so bad?" due to this.

Alltho I belive this is hopefully something that wont show up in 2.0