LEVEL refers to the MOSFET model that describes
the terminal I-V characteristics of the
transistors. LEVEL 1 is the simplest Mosfet model
and is in general sufficient for describing
discrete transistors.
However to simulate integrated circuit transistors, one need to use a more
sophisticated models. LEVEL 2 includes
extensive second-order models, while LEVEL 3
is a semi-empirical model that is better suited
for short-channel transistors. Another model
that is especially suited to model short-channel effects is called the BSIM model (LEVEL 13 in
HSpice).