So whatever level you are, is the league you are in. So if you have just started and are level 1, then you will be playing in league level 1. If you are experienced and level 23 then you will be playing in league level 23.
If you don't get promoted, you will stay the same level therefore play the same level league the next season. This means you won't lose 20%, tankers are people who deliberately don't promote so their teams become very strong because they don't lose 20%.