FLAC longform is free lossless audio codec. Lossless means, during compression, its not throwing away bits like MP3 or mp4 compression codecs do. So, if its source is CD, every bit is stored and not thrown away. Then it uses algorithm to compress that data, sort of like zip is. After extraction, you get 100% of original. It's the same way if you take a text file, zip it. After unzip, it will be exactly same as original file.
About level 1 to 5 compression in FLAC - It also similar to what zip has. Zip/rar also has different levels of compression. That levels does not mean difference in quality but rather how much processing can be spent in compressing/uncompressing it. Using different levels will make compression more efficient as far as file size is concerned. However, it will also need more processing to extract it. Not all devices can do that, so better to stick with standard level for FLAC compression as most devices are tested against it.
In a nutshell, FLAC is exact copy of the source, be it CD, DVD-Audio or any other uncompressed music data. There is no difference and no system is going to reveal it.