Crew Levels is what measures the effectiveness of your non-soldier crew, ie Engineers and Scientists. In the Vanilla game, everybody stays at Level 5. With this mod installed, engineers and scientists will have the chance to go up and down in level.

This will generally affect how fast they can do things, and how much of an increase they have to things (ie a Level 10 engineer will provide more than 2 gremlins in a workshop, work faster in the proving grounds, etc, whereas a Level 10 scientist will provide a lot more research speed by themselves, and in a Laboratory).

For certain mods, they will also automatically work with this (ie any mod that changes the lab and psi lab to use scientists will still see benefits from high level scientists working on it).