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The required level on an item is the level of the character required to equip the item.

It's not clear as yet how item level requirements will be determined but we can get an idea from the previous two games of the approach Blizzard might be taking.

Required Level in Diablo 3

It's unknown whether Diablo 4 will follow the Diablo 3 route exactly where the only item requirements are the character class or character level. In Diablo 3, players could equip items higher than their current level with affixes which would reduce the required number significantly allowing the character to equip a higher level item compared to their current level.

Required Level in Diablo 2

Dexterity and Strength are two main factors that determine whether an item could be equipped in Diablo 2 but a character must meet the required level indicated on the item to equip an item.