The stratum levels define the distance from the reference clock. A
reference clock is a stratum 0 device that is assumed to be accurate and
has little or no delay associated with it. Stratum 0 servers cannot be used
on the network but they are directly connected to computers which then
operate as stratum-1 servers. A stratum 1 time server acts as a primary
network time standard.

A stratum 2 server is connected to the stratum 1 server; then a stratum 3
server is connected to the stratum 2 server and so on. A stratum 2 server
gets its time via NTP packet requests from a stratum 1 server. A stratum 3
server gets its time via NTP packet requests from a stratum-2 server... A
stratum server may also peer with other stratum servers at the same level
to provide more stable and robust time for all devices in the peer group
(for example a stratum 2 server can peer with other stratum 2 servers).
NTP uses the concept of a stratum to describe how many NTP hops away a
machine is from an authoritative time source. A stratum 1 time server
typically has an authoritative time source (such as a radio or atomic clock,
or a Global Positioning System (GPS) time source) directly attached, a
stratum 2 time server receives its time via NTP from a stratum 1 time
server, and so on.
Reference:
figuration/guide/bsm/16-6-1/b-bsm-xe-16-6-1-asr920/bsm-timecalendar-
set.html