Is the arrow pointing up in this slide supposed to be the normal of the point on the surface, or is it actually "upwards"?

Also are there any downsides to always using a large distance value d? I can imagine that for the scene in the previous slide, if d was too small, the interiors of the buildings wouldn't be attenuated enough, so it seems like d has to be tuned to have the right effect.

Arrow pointing up should be the surface's normal. I am also wondering how to determine the value of d.

Is d just set as a constant possibly for each texture?

d is probably some rule of thumb distance, perhaps 5 feet, where in-game graphics wouldnt seem broken if something from that distance didnt cast a shadow to the surface in question.