You forget about the first phase of the KYC, which is the primary KYC that requires the gambler to fill out their name and mobile number when necessary.
Totally correct, the different levels in identification, is just a means for the casino to get to know you as a customer. So they request as you play more and win more, you complete these verification steps so you can access all features of the casino and don't get restricted during any withdrawal process. Each of these kyc levels has different periods of completion but to be on the safer side, it would be better to completely fill them or go through them as early as possible so it doesn't become an issue later on.. just to be clear, all casino might not have the same requirements for each kyc levels so do proper research on what is required before registering on any casino so you know which documents you have or don't have.