Jeff Schewe gives a succinct summary of Lightroom's noise reduction in this Adobe forum thread:

In terms of use, you can't separate the noise reduction from the image sharpening in the Detail panel. If you don't have optimized sharpening, you won't get optimal noise reduction (other than color noise reduction which is pretty good at default). The single biggest factor with proper sharpening is setting the correct radius. As it relates to noise reduction, the Detail slider and the Luminance Noise slider are interconnected in a way most people don't realize. As you increase the noise reduction you can also increase the Detail slider setting to recover some of the loss of edge sharpness as long as you've properly set the radius: below 1 for high frequency images and above 1 for low. Working all 5 sliders in the Detail panel are required for optimal sharpening and noise reduction…