I might've missed something. Where do indent levels come into play? AFAICT Markdown has no concept of indentation.
IIRC, lists and code blocks depend on indentation to decide where they begin/end, and I think what level they're at.
I think code blocks don't track indentation. A code block is just a bunch of lines beginning with 4 spaces (or blank lines) and the rest (when >4 spaces) are treated as leading spaces.