Prodigy/Chosen One & Spell Level

So, does "one level lower" mean you have to subtract -1 to the spell's level (e.g. from 5 to 4), or that the level is decreased to the next lower tier (e.g. from 5 to 3)?

I know maybe it's obvious, but now I can't find anything 100% clear in the pdf.

I took it to be spell level 5 becomes 4. Otherwise, I don't think they should use the word "level." It's a level 5 spell, not a tier 3 spell.

It's "level".  The math of how many spells you can prepare, etc, is based on levels of spells.  An adjusted level 5 spell becomes effective level 4 and gives you space for another level 1 spell, plus you can prepare it a full level earlier than your less prodigious counterparts.

Thanks! I needed to ask to be 100% sure :)