There are many, many different ways to calculate someone's language proficiency. There are a bevy of tests (IELTS, TOEFL, TOEIC, to start with), all with its own practical application and theoretical framework and scoring system and quirks and administrative headaches. And then there is the Common European Framework, which simplifies the whole thing down to 6 levels, with a helpful letter and number. Is that oversimplifying things?
In my experience, the Common European Framework of Reference for Languages, or CEFR, is the easiest and most practical way to describe someone's language ability. The CEFR is not a test, not something that is administratively determined, but something that can flexibly be applied to students. And each of the main levels, A, B, or C, applies to a pragmatically distinct phase of English use. The information above is good, but here is how I usually describe it as an ESL teacher, when my students ask about their levels:
- A, or Beginner: at this level, the student can use settled, predictable phrases about artificial topics. These are the most common and stock phrases and topics: "My name is Matthew", "Where is the library?" and "I live in Paris". This level also usually involves declarative statements or questions.
- B, or Intermediate: at this level, the student can talk about real topics of interest to them, and carry on conversations about specific academic or real-world interests. A student can also talk in some variety of conditional or counterfactual statement. The greatest limitation at intermediate level is that usually a student can only follow a linear topic, and shifts of topic can still be quite confusing. At intermediate level, a speaker still depends on a somewhat controlled environment, and a friendly, and clear speaker of the native language, to have a productive conversation.
(I usually phrase this to my students: at intermediate level, you can talk with friends, at advanced level, you can talk with enemies)
- C, or Advanced/Proficient, is when a student can now practically use the language at the level of a native speaker. At C1, while they can practically speak the same as a native in most situations, there are still small grammatical errors or oddities in word choice that distinguish them from a native speaker. At C2 level, even a native speaker might believe they are a native speaker. Some of the abilities that separate C-level speakers from B-level speakers are the ability to easily speak with multiple people at once, the ability to speak with unhelpful or hostile people, the ability to change topics quickly, the ability to deal with difficult accents or speech impediments, and the ability to speak in a non-literal or metaphorical manner.
It is not a perfect system, of course, and there are many cases where someone might have practical issues (such as shyness), where someone might speak below their level. Sometimes people from academic backgrounds might have be C1 or even C2 in writing, and only B2 in speech. But in general terms, the CEFR language levels are a fast, practical way to describe someone's ability in a foreign language.