The value of the Process Level attribute is calculated, and it shows how many linked diagrams there are, from the current diagram to the top diagram (inclusive).
It is calculated by taking the shortest path. So, for example, if there are 3 diagrams (A, B & C), and A is linked to B is linked to C, but A is also linked to C, then the Process Level for diagram C will be 2, not 3 (i.e. A is 1, then C is 2).
The Process Level attribute is not calculated by the number of folders in a directory structure.
If you would like to try this out for yourself, you can download the attached file: Process Hierarchy Demo.sgx
In this demonstration, diagram "Level 1 Process" is the top process, and diagram "Level 5 Process" is the bottom process. Level 1 is linked to Level 2, and Level 2 is linked to Level 3, and so on...
For example, when viewed in Velocity, you should see something like this.
Note that folders or a directory structure plays no part in the value of the Process Level attribute. This is because all the diagrams are in the same folder.