Okay, I’m going to post this info from the Steam forum here for posterity in case we wonder how this works later. Someone asked if max_dungeon_level = 65 in the settings meant that 65 was the max number of levels. The dev responded with the below:
max_dungeon_level is more of a guide as to what it should be, and you will usually get much smaller numbers, and you may very rarely see numbers larger than 65. The distribution is skewed to favor smaller max dungeon levels. You can change the skew with the setting max_dungeon_level_skew (valid 2-10). The actual calculation is:
for each dungeon lair, roll 3 numbers from a chi-squared dist’n with max_dungeon_level_skew degress of freedom, and take the minimum of the 3 rolls. Multiply this by max_dungeon_level and divide by 10 to get the actual max dungeon level for the lair.
Also, they said that the valid range of values for max_dungeon_level is 1-1000.