It’s Render Unified Lighting, FFlagRenderUnifiedLighting16, from Let There Be (Unified) Light! Unified Lighting Enters Studio Beta
If you turn this Flag off, you’ll get the original Graphic Settings behavior for the Graphic Levels.
Also, on Graphic Level 1, you’d also lose “Bloom”. I haven’t ever examined all of the things the original Graphic Levels control.
One of the Levels enables some kind of MXAA, and the other one enables Ambient Occlusion.
But for sure Graphic Level 3, only used to enable things like Normal Maps on Textures.
And Graphic Level 4 would enable dynamic lighting, but only when in range, while Graphic Level 5 would do it on the entire world.