On average, it's good to shoot for roughly an 8th grade reading level for most mass-market or business documents.That will let you reach the widest range of literate individuals. I'm not sure you could really write a serious gaming book at anything less than that (and 3.X is certainly not at a grade-school reading level, yet is definitely less than the arcane original books.

). It allows you a good bit of variety in topic and presentation, and yet avoids a lot of esoteric or difficult vocabulary.
Depending on the game, however, I've written for much higher. When I write for WW, I'll often hover around 11-12th grade, simply because of the focus of the material and the level of literary and historical reference often used. That's true for a lot of their work. Guardians of Order varies, depending on the book and the license. Shadowrun is often higher, especially when a section is focusing on scientific or thaumaturgical research or theory within the setting.
In general, reading level is based on a few things:
1) Sentence construction. Does it use simple or complex (or compound, or compound-complex) sentence structure? Are there lots of phrases and clauses? How much does alternative punctuation play a role?
2) Vocabulary. How common are the words? How technical or specialized is the vocabulary?
3) Readability. How long are the sentences? How long are the paragraphs? How many sentences are in the paragraphs, and what sort of sentences are they? Is the organization easy to follow?
4) Content. by this I don't mean "what's the book about," but rather things like how the text is structured. Are there a lot of fragments or other unusual constructions? Are there a lot of advanced grammatical and literary structures? Are concepts such as irony, metaphor, allegory, or other such tools being used?
Reading level is not determined on an individual basis, but according to what one is expected to be able to handle at a given grade. While individuals can and do vary, there is a standard that has been accepted and is used in children's books and on up to determine what sort of book is appropriate for what level of reader. Microsoft Word can tell you what grade level text is when it does a spell check, but I don't know whether it works strictly on multi-syllabic words, grammar, or what. I do know that it strikes me as being reasonably accurate.