A runlevel is basically a predefined configuration that the computer will operate within. Each runlevel starts or stops scripts for various services depending on how the system should be set up. The system can only operate at one runlevel at a time - it applies to the system at a whole.
0 - halt
1 - single user mode
2 - multi user mode with no networking
3 - multi user mode with networking
4 - unused
5 - multi user mode with networking and GUI
6 - reboot