18650 will give it the max output. It is just one level since there's no circuitry to regulate how much power goes to the led. It's just as much power as the battery can give and hence why it's limited to just one 18650. Any larger battery or higher voltage setup and it will kill the led. With that being said, you can run it with smaller batteries for reduced output but at least you would have options.
The reflector used in the light is larger than a typical P60 setup, so it will have a narrower beam and thus throw further. I really do like this setup and I've always wanted to pick up one of these but I know that I wouldn't use it very much. For what I do mostly, camping and backpacking, this is not an ideal setup, but I can see this as a VERY useful light for search and tactical scenarios.