Levels are a biological occurrence appearing only personified constellations and stars who know how to use magic. It is the human equivalent to aging.
Since the bodies of constellations and stars are created, not born, they have no birthdays, and the notion itself is a foreign concept to them, as revealed by Fornax in the novel. However, they are still capable of aging physically, which is accomplished by gaining enough experience not only the realm of magic, but also how they mature emotionally and mentally as they experience the world around them, however long it may take. Corona Austrina and Corona Borealis being an expection, a star and constellation's level number is equal to a human's physical age. Stars and constellations are automatically a level 2 when created, and as such there are no infant bodies.
It is unknown if a constellation or star decreases in age should they lose the magic they have learned.