There are different finish levels for drywall and each has specific purposes. Besides the different types of drywall available, they come in different finishes as well. The levels range from 0 – 5 and should be specified accordingly. 
Here is a summary of the different levels as per national gypsum, the largest gypsum board producer: Level 0 There are no finishes or taping and is used for temporary construction. This unfinished drywall is used when the final decoration is undetermined or temporary. Level 1 The tape that covers the joints needs no joint compound applied over it. Ridges and tool marks are acceptable. This type of finish is used where the area is concealed or not seen like attics and firewall applications. Level 2 All joints and interior angles have tape embedded in joint compound and wiped with a joint knife leaving a thin coating of joint compound. Joint compound is applied over fastener heads and corner beads as well. This type of finish is generally used in garages and warehouse storage areas where the appearance is of no concern. Level 3 At this level all joints and interior angles have tape embedded in joint compound and one additional coat of joint compound is applied over joints and interior angles. Fastener heads are covered with three separate coats of joint compound. All joint compounds should be smooth and free of tool marks and ridges. This finish is used where medium or heavy texture wall covering will become the final decoration. This type of finish is not recommended for smooth painted surfaces or light weight wall coverings. Level 4 This level has the additional requirement of two separate coats of joint compound applied over all flat joints and one separate coat over interior angles. Fastener heads and accessories shall be covered with three separate coats of joint compounds. This level of finish is recommended for flat paint, light texture wall covering, but gloss, semi-gloss, and enamel paints are not recommended with this finish.
Level 5 All the requirements of level 4 plus an additional thin skim coat of joint compound is applied to the entire surface. This is the highest degree of quality and this level is recommended where severe lighting conditions exist and for areas that receive a gloss, semi-gloss, enamel or non-textured flat paints. It is recommended that level 3-5 are coated with a drywall primer to help fill pores for a smoother surface.
