PWDLVL 2 to 3 question

My client recently moved from PWDLVL 0 to 2. They are planning on changing
to 3 soon. Since the move from 0 to 2 is rather recent, not all level 0
passwords will have been changed (90 day rotation to force a change).

I read the below paragraph in the IBM documentation for level 3. Does this
mean that their level 0 password is going to be wiped out and they will no
longer be able to sign on until we change their password? I'm hoping
someone can translate this for me.

Thanks.
******
All user profile passwords that are used at QPWDLVL 0 and 1 are removed from
the system when QPWDLVL is 3. Changing from QPWDLVL 3 back to QPWDLVL 0 or 1
requires a change to QPWDLVL 2 before going to 0 or 1. QPWDLVL 2 allows for
the creation of user profile passwords that can be used at QPWDLVL 0 or 1 as
long as the length and syntax requirements for the password meet the QPWDLVL
0 or 1 rules.