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As its name suggests, r_drawentities controls how entities are rendered. It can take a few possible values.
If set to 0, entities will be invisible. This is sometimes used to boost the frame rate as entities can be surprisingly costly to render. Do check with the community to see if this is legal for the particular category you are running.
If set to 1, which is the default value, entities will be drawn in the normal way intended for normal playthrough.
If set to 2, the skeletons of certain entities will be drawn, particularly NPCs. This is not useful for speedrunning, though modellers may find this helpful.
The more relevant value for speedrunners is 3. With this value set, some entities will be drawn with only their hitboxes. Hitboxes are the actual damage receiver associated with a particular model. In other words, if you want to inflict damage on entities with well defined hitboxes, you must target their hitboxes and not the model. This CVAR value has obvious use for high-precision runs and TASes.
With 4 set, entities will be rendered with translucent hitboxes and the model beneath the hitboxes.