It's all labels forever as you go down the levels... 😛
Your suggestion would better fit a hierarchy - just out of curiosity what were the other options?
I also don't believe that compartmentalization necessarily ignores levels, rather it is a further constraint on need to know.
In the above access to the roasted-badger program also has four levels of impact - and if you were only allowed confidential information, you'd perhaps only know that roasted-badger was a hidden secret item avaible from the cookhouse on Tuesday...
Using the term "levels" in the question would provide too much information to the candidate, making the question guessable. I do understand that they should not have put both Compartmentalized and Hierarchical in the same answer set, primarily because it will confuse anyone who works with certain classification systems. I wonder if the people writing the question understood the nuance. MAC systems were intended both for hierarchical classification programs and Compartmented Information. Compartments were an actual use case (SCI) for the construction of mandatory access control systems back in the 1980's. Because one could work with information at the same classification level, but in different compartments, operated under different programs. I have no idea why the question writers would fail to address that nuance.
I would recommend that they fix the question too. It looks like there is a problem with multiple keys.
I think on the last point it’s not having the experience of use in real world scenarios.
I don’t think there is too much of an issue with both / conceptually they can get used together - but many people taking the question won’t have real world experience and those folk would be at a disadvantage on the question, likely as you point out the author was.
Most questions can be guessable, or at least it’s usually possible to eliminate possibilities via logic to have two remaining.
I think there may well by a typo in the question due to the repeat of labels.