From the readme:
0 - new user: can't post.
1 - user: can post & edit/delete their own posts.
3 & higher - admin: can post, edit/delete other people's posts, and change the options.
Any user whose level is higher than 1, can edit/delete the posts and change the level of users whose level is inferior. Example: a level 2 user is not an admin, but can edit the posts of level 1 users, and up the level of a new user from 0 to 1.
There's a bit more in there too.