The general presentation of concepts in the old Language Levels Facility corresponds to the book How To Design Programs by Felleisen, Findler, Flatt, and Krishnamurthi. Basically, the levels provide an incremental introduction to data structures and operations on those structures while helping to simplify syntax for the students.
The levels are also designed to allow the introduction of design patterns--models for writing code with certain abstract behavior that are essential to teaching elegant object-oriented programming.
Here is a summary of what is allowed at each of the three old language levels.
And here is a summary of the code augmentation performed at each level.
Read on for a more detailed explaination of each level.