Level 4? What does that mean?

Before explaining the different levels, one must first understand the word interoperability. The definition set by the National Alliance for Health Information Technology (NAHIT) for interoperability is:

"In healthcare, interoperability is the ability of different information technology systems and software applications to communicate, to exchange data accurately, effectively, and consistently, and to use the information that has been exchanged."  

Level 1: Non-electronic data. Examples include paper, mail, and phone call.
Level 2: Machine transportable data. Examples include fax, email, and unindexed documents.
Level 3: Machine organizable data (structured messages, unstructured content). Examples include HL7 messages and indexed (labeled) documents, images, and objects.
Level 4: Machine interpretable data (structured messages, standardized content). Examples include the automated transfer from an external lab of coded results into a provider’s EHR. Data can be transmitted (or accessed without transmission) by HIT systems without need for further semantic interpretation or translation.

At Level 3 and lower interoperability, the data can be used by humans, but for the most part cannot be used by machines for automated decision support, active guidance, and pattern analysis. As a result, opportunities for error and cost reduction based on computerized suggestions are substantially less.

So how does each level truly differ? Please read this document for a more descriptive explanation:

                        What is Interoperability? PDF