I imagine each successive logical level of learning as a process of systemic activity in which the learning (understood as specific changes in the system over time) comes to occur in ever larger parts of the system. I will begin by describing the first level.
Learning 1 is commonly understood as simple Pavlovian or operational conditioning. An organism is exposed to a specific environmental event which repeats itself, and this has the result of familiarizing the animal with the contingencies of their behavior in this instance. For example, an animal that repeatedly barks and is given a treat during one session with its owner has learned at level 1 the specific barking>treat contingency.
Learning 2 involves a more substantial type of learning. Rather than learning how to act in a specific situation, an organism that undergoes learning 2 learns to approach novel situations and act in a certain way that has been rewarded in other situations in the past. In other words, learning two is the process whereby an organism learns to act certain ways in certain types of situations, rather than just act in a certain way in a certain situation.
According to Bateson, level 2 is the general ceiling for most people's learning. Despite this, learning at level 3 is attempted with some success-and some destruction. The relationship between levels 1 and 2 is the same as between levels 2 and three. Beyond this level three is (and Bateson admits this) difficult to describe.
It helps to go back down and describe level 2 in more detail, and then scaffold off of this for level three. So, level 2 involves the development of the ability to approach a novel situation and categorize it (and then act towards it) in a certain way. Although the situation facing the organism is novel, the organism still retains its acquired ways of acting. Learning at level 2 gives the organism an intelligent basis upon which to choose a certain alternative.
In contrast, learning 3 involves learning to intelligently choose between sets of alternatives themselves. The choice of alternatives is no longer at the level of the individual situation (as it was at level 2), or at the level of the individual action (level 1). The choice that must be learned to be made intelligently occurs at the level of the sets of alternative interpretations.
So, someone who has learned at level 3 would, upon approaching a novel situation, say to themselves "what set of interpretations offers the most promise in this instance?" Once a decision has been made, the activity occurs on level 2-which interpretation within the selected set will I make-and then on level 1: what is the appropriate action to take in this context?