AH you're right, I never caught that! It's simply that the level is stored in a single number. When you lose it's decremented so that you restart instead of progressing. It doesn't make sure the text says a different number in any way. It's not breaking anything, but yeah! :P
Thanks. And I simply didn't bother with story. This was mostly an excuse to make a platformer which is something I just don't usually do. Give those narrative stars to someone who did have story. :)