Hi John,
It may be helpful to view a list (or really any expression in the Wolfram Language) as a tree. You can even visualize it using the function TreeForm. For example here is a nested list with Dimensions {4, 3, 2} and its TreeForm representation:
words = {{{"anisotropy", "mugful"}, {"organist",
"socialization"}, {"worsening", "feeder"}}, {{"mawkishness",
"polity"}, {"technique", "cathartic"}, {"sore",
"zenith"}}, {{"aniline", "linguine"}, {"brutality",
"boutonniere"}, {"nonintervention", "venation"}}, {{"zirconium",
"compartmentalization"}, {"pentathlon",
"servitor"}, {"immovability", "blah"}}};
Dimensions[words]
{4, 3, 2}
TreeForm[words]

This tree/expression/list has 3 levels. Levels provide a general way of specifying collections of parts in Wolfram Language expressions.
Since it has 3 levels, you can use a maximum of 3 indices to extract parts of this list using the Part function. The following will get a word from the last level:
words[[3,2,2]]
But attempting to get words[[3,2,2,1]]
gives the error "Part::partd: Part specification <<1>> is longer than depth of object."
At Level 0 we have the entire expression. At Level[expr,{-1}]
we have a list of all "atomic" objects in the expression, in this case each individual word.
Your interpretation "level spec is the depth of these indices" therefore makes sense.
"levelspec" allows you to specify at which level a particular function should work on an expression. If we want to StringJoin the elements of words at level 2, we should Apply at level {2}.
In[40]:= Apply[StringJoin, words, {2}]
Out[40]= {{"anisotropymugful", "organistsocialization",
"worseningfeeder"}, {"mawkishnesspolity", "techniquecathartic",
"sorezenith"}, {"anilinelinguine", "brutalityboutonniere",
"noninterventionvenation"}, {"zirconiumcompartmentalization",
"pentathlonservitor", "immovabilityblah"}}
If we want to StringJoin at level 2, we need to Apply at level {2}:
In[41]:= Apply[StringJoin, words, {1}]
Out[41]= {"anisotropymugfulorganistsocializationworseningfeeder", "mawkishnesspolitytechniquecatharticsorezenith", "anilinelinguinebrutalityboutonnierenoninterventionvenation", "zirconiumcompartmentalizationpentathlonservitorimmovabilityblah"}
Hope this helps.