This post aims to explain what the FL means when she talks about the SML possibly being at a "higher level" or trying to figure out what "level" the SML is at.
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TL;DR - The FL skimmed a transmigration novel about a fictional girl who transmigrated into a historical novel (a novel-within-a-novel). Then the FL transmigrated into the transmigration novel she skimmed. The FL thought her own story might also be a transmigration novel and that the SML might be from the real world and might've read her novel (a novel-within-a-novel-within-a-novel) before transmigrating into it, which would give him a big information advantage and put him on a higher level than her.
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Recall the synopsis for The Devil's Beloved Consort at the very beginning of the drama. It said that it was a transmigration novel (Transmigration Novel B) about a girl who read a historical novel (Historical Novel A) and then transmigrated into that historical novel. Then the FL is asked to edit that transmigration novel (Transmigration Novel B).
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Historical Novel A (A Thousand Trees Blossoming at Night in the East) - A historical novel. In the original version of this historical novel, Xie Yong Er is only a cannon-fodder character.
Transmigration Novel B (The Devil's Beloved Consort) - A transmigration novel that tells the story of a girl from a fictional version of the real world who reads Historical Novel A. After reading Historical Novel A, this girl is transmigrated into Historical Novel A, takes over the character Xie Yong Er, and changes the events of the historical timeline so that Xie Yong Er becomes the main character.
Story C (How Dare You) - In the TRUE “real world”, the FL is tasked with editing Transmigration Novel B. She skims Transmigration Novel B (which covers the events of Historical Novel A and how the transmigrator female protagonist changed them), is transmigrated into Transmigration Novel B, takes over the character Yu Wan Yin, meets two other transmigrators, and changes the events of the historical novel so that Yu Wan Yin becomes the main character and Xie Yong Er is sidelined into being a secondary female character.
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So there are at least two “real worlds”. There is the seemingly TRUE “real world” of Story C that the FL is from before she transmigrates, and there is the definitely-fictional “real world” of Transmigration Novel B, which is the fictional “real world” that the transmigrator from Transmigration Novel B is originally from before she transmigrates.
And there are three versions of the same historical novel world events.
--The original version of these events is told in Historical Novel A.
--A modified version (influenced by one transmigrator) is told in Transmigration Novel B.
--A different modified version (influenced by at least three transmigrators) is unfolding in Story C.
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The FL has skimmed Transmigration Novel B, so she knows that the transmigrator who took over Xie Yong Er came from a fictional “real world”, which is described in that novel. The FL assumes that the “real world” that she (the FL) came from is actually real, but she acknowledges that it is possible that her “real world” might *also* be fictional. There could be a novel-within-a-novel-within-a-novel setup so that Historical Novel A exists in Transmigration Novel B which exists in a separate novel that tells Story C (so… Hypothetical Novel C) and that Hypothetical Novel C could exist in a world that was actually real. In that scenario, the “lowest” or “least real” world would be the “real world” in Transmigration Novel B, above that would be the “real world” that the FL came from in Hypothetical Novel C, and then there would be a separate “higher” or “more real” world where Hypothetical Novel C existed and could be read by a “real” person.
At one point, the leads wonder if Xiahou Bo (Prince Duan / the SML / antagonist) might be a transmigrator. If he was a transmigrator, the FL knows he didn’t come from the same world that the transmigrator who took over Xie Yong Er came from (the fictional “real world” in Transmigration Novel B), because the FL skimmed Transmigration Novel B and there wasn't anything about Xiahou Bo being a transmigrator. So that would leave two possibilities. Either he came from the same world that the FL came from (in which case he might’ve read Transmigration Novel B in that world, just skimmed it like the FL, or just read the synopsis like the ML who transmigrated and took over Xiahou Dan) OR the world that the FL came from is actually fictional (she is just a character in Hypothetical Novel C) and Xiahou Bo came from the TRUE “real world” which is “higher” or “more real” than the FL’s world. If that second option was true, it would potentially be a big problem because it would mean that Xiahou Bo could’ve read Hypothetical Novel C in the TRUE real world before he transmigrated into the historical novel world, which would mean he would have a lot of information about the FL and about how events could play out in the same way that the FL has a lot of information about Xie Yong Er and how events might play out because she read Transmigration Novel B.
Hypothetical Novel C would have the most information (it would cover all versions of the historical timeline and two fictional "real worlds" of other transmigrators - so Xiahou Bo would be on the highest level of knowledge / insight), Transmigration Novel B would have the second most information (it covers two versions of the historical timeline and one fictional "real world" of another transmigrator - so the FL would be on the second highest level of knowledge / insight), and Historical Novel A had the least information (it only covered the original historical timeline - so the transmigrator who took over Xie Yong Er would have the lowest level of knowledge / insight).
[Note: The transmigrator who took over Xiahou Dan only read the synopsis for Transmigration Novel B, so he had very little information about the characters or the plot.]
The FL later concludes that Xiahou Bo is probably not a transmigrator, but she acknowledges that she has no way of knowing for sure whether her “real world” is actually real or if it is fictional / if her story is actually just the plot of Hypothetical Novel C.
