Caster Level
A spell's power often depends on its caster level, which for most spellcasting characters is equal to your class level in the class you're using to cast the spell.
You can cast a spell at a lower caster level than normal, but the caster level you choose must be high enough for you to cast the spell in question, and all level-dependent features must be based on the same caster level.
In the event that a class feature, domain granted power, or other special ability provides an adjustment to your caster level, that adjustment applies not only to effects based on caster level (such as range, duration, and damage dealt) but also to your caster level check to overcome your target's spell resistance and to the caster level used in dispel checks (both the dispel check and the DC of the check).
Spells per Day/Spells Known
When a new loremaster level is gained, the character gains new spells per day (and spells known, if applicable) as if she had also gained a level in a spellcasting class she belonged to before she added the prestige class. She does not, however, gain any other benefit a character of that class would have gained. This essentially means that she adds the levelloremaster to the level of some other spellcasting class the character has, then determines spells per day, spells known, and caster level accordingly.