• A Level 1 platform's apps run elsewhere, and call into the platform via a web services API to draw on data and services -- this is how Flickr does it.
• A Level 2 platform's apps run elsewhere, but inject functionality into the platform via a plug-in API -- this is how Facebook does it. Most likely, a Level 2 platform's apps also call into the platform via a web services API to draw on data and services.
• A Level 3 platform's apps run inside the platform itself -- the platform provides the "runtime environment" within which the app's code runs.

[...] I believe that in the long run, all credible large-scale Internet companies will provide Level 3 platforms.