This is what they mean:
1 Single-User mode
2 Multi-user mode console logins only (without networking)
3 Multi-User mode, console logins only
4 Not used/User-definable
5 Multi-User mode, with display manager as well as console logins (X11)
So, when specifying a runlevel in
chkconfig, you tell the service if it should be on or off in a certain runlevel.