This drop-down option has two effects, but neither of them conforms to the literal description. Let me talk about the first effect first. When I set the "Level to be displayed in the library" to 1 level, level 2 and level 3 respectively, when I click on the multi-level list, I will find that the icon has changed. Therefore, the first effect is only the difference of icon display, and it has no actual influence.

The second effect, for example, I put the cursor position behind Anthony Title here, click on the multi-level list, and modify the "level to be displayed in the library", for example, to level 2, then this is the style that Anthony Title will be applied as level 2. So in fact, the "level to be displayed in the library" will directly apply the style corresponding to the level you choose to the paragraph where your cursor is located.

Having said that, in fact, the level to be displayed in the library will not change the style of your overall multi-level list, so you don't need to pay attention when setting the styles of all levels. You just need to modify the level to be modified+the style linked by the level+the format of entering numbers step by step, and finally decide your level to be displayed in the library according to the style required by the paragraph where the cursor is located.