Originally posted by: Hotsuma
Level 1 : Better than the naked eye, able to see more things clearly. Especially movement. Not able to copy jutsus yet, though. (Sasuke VS Haku)
Level 2 : Takes the first Sharingan ability, and improves it, plus added ability of copying jutsus. Copying jutsus is not yet fluent, and time/practice (less than the normal ninja though) is required in order to perform learned jutsu perfectly. (Sasuke learning Lee's taijutsu through time, and not just instantly)
Level 3 : Improves the ability to see through jutsus/movement even farther than Sharingan 2, and even gives insight into what is *coming* and not just what's going on at the moment. (Sasuke VS Naruto) Copying jutsus is a lot easier with this, and if experienced enough, able to perform learned jutsu right on the spot of when it is learned. PLUS, it has the ability to hypnotize somebody, but only through suggestion.(1st Zabuza fight)
Mangekyou Sharingan : Ultimate Sharingan, able to do everything mentioned above on a higher/highest level, and genjutsu isn't limited to just messing with your head, but your spirit as well. (Tsukiyomi) Only Itachi and Sasuke are able to aquire it... but there's rumors of a third user?
Basically, Each Sharingan comma improves every aspect of a previous form, while adding an extra ability or two.