Hi,
Usually when logging on to a router you get on with privilege level 0. When you enter enable mode, you jump straight up to privilege level 15.
That's what will happen if you're using password only authentication, or if you're using a username/password pair as you have listed above.
That fine for most setups, but say you decide that you always want to go straight to enable mode when you log in as "admin", you can do that by entering:
router(conf)# username admin priv 15 password admin
If you don't assign a priv number to a user, they get level 0 by default.
So what are all the levels from 1 to 14 for? you ask.
Well, say you know that an ops person need to be able to view the running config, but you don't want ops to have enable passwords. You would create a user like this:
router(config)#username ops priv 7 password ops
and then allow level 7 user to issue the sh run command
router(config)#privilege exec level 7 show running-config
Obviously then you can create a lot of different command sets for different types of user, without giving out full control, by assigning various commands to various privilege levels.
There's other applications for it, like setting up RADIUS users with different privilages, and allowing level X users to go into config mode and change certain things eg snmp community stings, etc.
Hope that help,
Paul.