Dungeon Level is a system defined in Appendix C. It can be applied to all kinds of adventure sites, not just actual dungeons. Outdoor and planar travel has no DL – dangers of all levels can be found therein.
In AD&D, DL is not equivalent to “challenge level” in other versions of the game. Higher DLs require not only levels, but proper equipment, magic, and henchmen in order to be “balanced.”
DL roughly corresponds to character level challenge-wise, but expects a party of 4-9 or more characters, with men-at-arms (below DL 4) and/or henchmen rounding out the numbers. A party of only three or four 4th level PCs may find a DL 4 area to be quite challenging if their party lacks henchmen. With low numbers of characters in a party, a round of unlucky saving throws can mean utter defeat.