It's a nice way of saying pyramid scam. Actually, many of them are technically legal. They pay people a commission not only on their sales of the company's products, but also a commission on the sales of any sales people that they recruit. Often the consumers of the company's products are also the sales force.
A multi-level company is one which uses the multi-level marketing strategy. This involves compensation of the sales force for income generated as well as recruiting of the salespeople. Some of the well known multi-level marketing companies include Oriflame and 5LINX.