True, Level 1 is pretty easy and I nailed it first time back in 2001.
The cert process is only needed to be able to fly larger motors than your typical Estes rocket. If you've flown model rockets before, you are familiar with A, B, C and D motors, each letter classification twice the total impulse ("power") of the prior. E through G class motors are fairly common now and are considered "mid power"; no certification required but there are stricter safety rules, further minimum safe distances, etc to follow.
Once you get into class H motors and larger you need a certification. Level 1 covers H & I class motors; you have to successfully build, fly and recover, under supervision, a rocket using one of those motors to pass plus be a member of one of the two certifying organizations Level 2 requires a successful, supervised project as well as passing a written exam and opens up the use of class J, K and L motors. Level 3 requires a major project, documented and under supervision, using electronics and it takes a high degree of knowledge and experience to successfully complete. Once you do that you may purchase and use class M motors and higher.
For me, level 1 is enough; I belong to a large club in New England (www.cmass.org) and we have a lot of high power flyers, but I don't fly the big ones often enough to justify the time and such to go to a higher level. I like cloning old models from the 60s and 70s, building classic kits and flying mid power but only occasionally put up an H or I rocket. Once you get to level 3 you are typically spending $400 or more per flight...and I'd rather watch someone else make a big statement like that then spend the time and money (and needing the workshop space) to do it myself. A class M or higher flight is definitely something to see sometime if you have the chance, though.
Liquid fuels ... virtually no one plays in that world as it is highly complex, expensive and dangerous. Some hobbyists, level 2 and up, fly hybrid motors, which are interesting and safe and much simpler.
Nothing these kids were doing really relates to rocketry though. A level 3 flyer would never be messing with propane on a school field like that...it simply isn't done, would at the very least void his/her liability insurance for safety rule violations and would likely violate numerous laws as well. I'm reading on the rocketry blogs that the hunch is that they were trying to make some kind of "pulse jet" engine that would be used to propel a skateboard. That's a, perhaps, doable project but as smart as they were they definitely should have had some guidance and supervision and operated under controlled circumstances...if an experienced adult supervisor approved the idea in the first place.