They cannot.
The client (your PC) needs to "ask" the server to know a target's level. You do this through the "check" command.
The check command returns the target level to your client, and then your client calculates the difference in level between YOUR level and the target level, and decides which of the possible messages to display.
This means that to know the level of a target you need to use the check command, cannot display it constantly like in other games.
This is already possible through third party addons.
If they really want to make a change they should do that instead of silly elitist stuff about your average item level and the target's level.
That's like one of the crappiest change I've heard in the last years.

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