Pilots - in particular new instructors - were largely left to themselves to interpret requirements.
This is simply untrue in most cases. A new Grade Three instructor was (is) under the direct supervision of a CFI who is burdened with enough manuals and syllabi to sink a small boat. That paperwork explains how and what will be taught.
You make it sound like they make it up as they go along.
As for other pilots, it would have been explained in their training how to choose a level and why. Basic stuff.