Cheers! Thanks for the kind words, and welcome.
Chunk level: this is the difficulty of all the monsters in the chunk, plain and simple. This is "The" level, in essence; it's where the rubber meets the road in terms of practical effects to you. Everything else is helping to play into this.
Continent level: this is the general difficulty of the continent at this time. However, some areas are more dangerous than others just inherently (lava flats, deep). And the deeper you go down into the caves in any level, the higher the chunk levels go there. So think of continent level as kind of a baseline escalation.
Spell level: This is the progression of your own power, and you want the number as high as you can get it, generally. It is indeed possible to craft higher than the continent level's current value (IIRC, but grain of salt there as it's been a long while), but to do that you have to journey sufficiently downwards in caverns to get higher-level crafting ingredients, which is the point of the caves being rewarding as you go way down.