Material level is the level of the Material that drops from Resources. The higher the Material level, the stronger/more efficient the tool is. Generally items made from components with higher material levels have better properties.
Currently the highest Material level is Diamond, and lowest Wood.
Here is a simplification of how a higher Material Level of the components used for Crafting can effect the properties of the created Item:
- Combat weapons deal more damage
- Shields and Armor provide better protection