Quoted from a post I found elsewhere:
1st Level: Your cards
2nd Level: What does your opponent have
3rd Level: What does your opponent think you have
4th Level: What does your opponent think you think he has
5th level: What does your opponent think you think he thinks you have
Etc. Etc.
Edit to add - some people call the my card thinking level 0. You get the idea though I'm sure. Levelling yourself is where you get so far ahead of your op's thinking that you end up going full circle.