Dialect leveling means that when people speak, they start to use more of the same way of talking.
Imagine that you and your friends from different towns used to say "y'all" and "you guys" to mean the same thing. But when you all start hanging out more, eventually everyone starts using "y'all" because it's more common where you live.
That's dialect leveling! People start to talk the same way because they're around each other more. It can happen in neighborhoods, cities, and even whole regions.