FLAC is a lossless format, but how does the Compression Levels work then? If it's lossless why are there compression levels?
What happens when I encode a file on setting 0 compared to 8?
Is the audio exact the same as the Wav-file even at setting 8 which makes the file the smallest possible compared to setting 0?

I'm confused

Lossless audio is always bitwise identical to the original pcm audio data. To explain it in a very non technical way, at level 8 the encoder will try more possible methods to compress the data to a smaller size, compared to level 0. That's why compressing at high levels will be slower.

Cool! Now I understand Thx for the easy explanation

It has different compression levels for the same reason as ZIP, RAR, 7zip, etc have different compression levels: CPU-power/time vs. compression/size. Most lossless compressors (audio as well as general data) have a "sweet spot" - at this point, putting in more cpu power results in little more gain in compression. With most encoders, this "sweet spot" is the default compression level (often called "normal").

- Lyx