What does "+N levels damage in combat" mean in Geneforge 2?

GF2 has some equipment kicking around with this modifier on it, such as the Student's Belt (+1 levels damage in combat) and the Thrusting Gauntlets (+2 levels damage in combat). But what does it actually do? The obvious interpretation is that it makes you hit as though you were N levels higher, but attack damage doesn't (at least according to the manual) actually scale with character level -- only with one of your stats (str or dex, depending on the weapon) + your melee or ranged skill.

Does it act as though you have +N to the relevant skill when attacking? Does it give +N to all damage dice in the attack, or +N dice? Whatever it does, does it affect spells too, or only melee and ranged physical attacks?