He said "new" character, I don't think he's talking about losing a level when you die.
I think what's going on is that you are confusing someone's houserule from either 4E or 3E with an official rule. There isn't (nor has there been) a written rule that says you create a new character 1 level less than what you had.
Quite often in a campaign, many DMs might have houserules that allow players to roll up a new character at an increased level, often based on the lowest level of the party, or lower level than what you had, or whatever. This has never been an official rule.
You start at level 1, unless your DM tells you that you can start at a higher level.