The system works like a United States of America report card: A is the best, an empty road, B is slightly more congested, C has more congestion than B, and D is perhaps the level of service of a busy shopping corridor in the middle of a weekday - you can move your car around, but not very well and not very quickly; you are hemmed in by other cars and trucks. F is a full-blown traffic jam. (The above grading refers to highways; however, some professors in urban planning schools have proposed measurements of levels of service that take public transportation into account. Such systems would include wait time, frequency of service, time it takes to pay fares, quality of the ride itself, accessibility of depots, and, perhaps, other criteria as well.)
In the past, some planners have aimed for an "A" Level of Service, but many transportation planners (especially fans of public transit) recommend aiming for a "C" level of service, one that would slow cars down and make roads safer for pedestrians (thus increasing the desirability of public transit if such transit has its own rights-of-way). To that end, transit-favoring planners recommend increasing population density in towns, narrowing streets, restricting car use in some areas, providing sidewalks, and making the scenery interesting for pedestrians.