While I realize this has been explained TO DEATH... I realize only a few days ago, I was wondering the same and couldnt easily find it until I found this site (on second character now due to my newfound knowledge).
So:
Code:
Your character's level =            12
Your highest skill mastery level* =  5
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Your farming gap =                   7
* Not your overall mastery (e.g., 20/300), but the mastery level of the skill that you have leveled up the most