LEVEL input argument accounts for number of detail coefficients in decomposition step. If “LEVEL” argument is not passed, then “DEC” is passed. Where “DEC” is output of mdwtdec which contains detail and approximate coefficients. wmspca works level wise on a signal.
Signal has level wise coefficients (suppose level is 5 then it has 5 detail coefficients (matrix) and 1 approximate coefficient (matrix) ). On passing signal and level wmspca calculates coefficients (this process is called as decomposition).