In general terms it is a level from which everything else is relative. In specific terms there is Dolby Reference Level which calls for 105 dB peaks at the listening position. You calibrate the receiver so that the output SPL when the volume knob is at some pre-determined position results in the reference level at your seating position.
The convention is to calibrate to Dolby Reference Level with the volume control at 0 dB on the receiver. Thus, if you are listening with the volume dial at -20 you are listening at 20 dB below reference level.
I've explained it in more detail many times, so you might want to search for the topic with posts by me.