"heading" = any paragraph (style) with outline level 1 or greater
"chapter" = any paragraph (style) with outline level 1
"outline level" = a paragraph property specified in the Outline & List tab
See also bug 152605 comment 23
For now - will also use this ticket to register "caption" and "index" tickets where "level" or "chapter" is involved.
Bug 153560, comment 10 - 12 gives (empirically-based) analysis for how "level" option behaves for Heading type and number range (caption) variables, and heading number in Index entry structure.