The interesting thing about fog effects in the late 90s and early 2000s is they were often implemented to hide the fact that an engine couldn't render too many polygons or else the framerate would die. In real life, unless the weather itself is foggy, fog doesn't take effect until VERY far into the distance, and even then you may still be able to see things several miles away if they're big enough, such as mountains.
As game engines got better, fog effects eventually stopped being a necessity and started becoming a design decision for sake of the environment. Part of the reason is because early fog effects are not dynamic, thus if you implement them at all, sooner or later all 3D elements of the scene would need to turn into the fog colour. This meant backgrounds had to be plain colours to match the fog colour, otherwise you'd end up with bright solid white or deep solid black overtop of a colourful background, which doesn't make sense visually.
Essentially, early fog effects and background textures don't match up very nicely. :P
In terms of NFS3, I don't know if there's any hidden fog options or anything, but every screenshot I've seen of it has no fog effects, so I doubt there are any, and it was probably built that way on purpose to provide a maximal draw distance and to allow for backgrounds to mesh in with the rest of the graphics.
--- Kris Asick (Gemini)
--- Pixelmusement Website: www.pixelships.com
--- Ancient DOS Games Webshow: www.pixelships.com/adg