They represent the subdivision level for quadtree tiles, starting with level 0. Whether they match osgdem tree levels, probably, but I cannot say without testing.
However, there seems to be a new bug in osgearth_seed ... level 0 tiles aren't being cached for spherical mercator data sources. I will add this as a bug ticket.
In any case: the plan in the future is to have the user specifiy min/max-resolution instead of min/max level, since the latter isn't really meaningful.