N5 means:

Only basic Japanese. It requires understanding of some everyday basic conversation as well as understanding some basic everyday topics written in Hiragana and Katakana and a few basic kanji.

N4 means:

This level requires understanding of basic everyday topics written in kanji and being able to listen and make everyday conversation in Japanese as well.

N3 means:

This level requires a good understanding of more formal and informal writing. It also requires individuals to be able have conversation in a more natural way.

N2 means:

This level requires a clear understanding of Japanese conversation on a wider range of topics and issues. One must also be able to read and understand a wider range of kanji.

N1 means:

This is the highest skill level. One must be able read and understand a variety of writings related to different circumstances. The N1 level requires the ability to comprehend all orally presented materials in a coherent and logical way.