Badge levels indicate completion of Foundation (level 1), Intermediate (level 2), and Advanced (level 3) missions - or those missions that are “Extended”. For example, completion of the Low-Code App Builder mission is Level 1; completion of the Low-Code App Builder Extended mission is Level 2. The 2 badges will display layered on top of one another in your Achievements page when you complete the missions. Another example is User Interface Foundation (Level 1). If and when a User Interface Intermediate mission becomes available, that would be Level 2.
Not all missions have levels, however – so you may only see a “level 1” if a mission does not have a 2nd level such as Intermediate.