Reading Level

I never knew how people were able to tell what reading level kids were reading at. I thought you had to be an education expert to determine that. Yesterday A6 was reading the book Dory Story. She read the whole book and only needed help with three words, fish names since the book is about fishes. On the book cover there is a sticker that says Level: 3.4. I didn't know what that meant.
I asked a teacher friend of mine and she told me that kids who were able to read that book were reading at a third grade and four months level. This was another one of those "I'm not sucking at this" moments!!!!