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While I don't have the exact technical definition of the term, I can give you an idea of what it is about.

Level II trading gives you access to more information about who is trading what. You can actually tell who is making a particular trade, to the best of my knowledge.

I wouldn't think this type of information would be all that important unless small fractions of changes in stock price are critical to you. They normally wouldn't be except for very short term trading.
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