Lv4 allows the user to do anything. It allows him/her to write HTML and JavaScript into a sprite. It also allows to set Plug-ins. In general, Lv4 is needed to paste Flash/JavaScript Badges into a sprite.
Lv2 allows the user to edit the page. It neither allows him/her to upload images or files, nor does it allow of writing JavaScripts. The link to the EditMode ([Edit]) is always displayed if the page allots Lv2 to a Public User.
Lv1 allows the user to only browse the page. It does not allow the user to edit it. The new page created in Administration Tools allots Lv1 to a Public User by default. This right can be cancelled at any time later. If the page does not allot Lv1 to a Public User, the page can be read only by the allowed Logged-in Users.
What users can do on the page is limited by the Permission Level (1 to 4). A higher level user has access to the functions accessible to a lower level user. It can be set in Page Property Manager. See Permission Level in Page Propery Manager.