Current situation:
If host sets level limit and you're below it - game is not show on your list in lobby.
What I suggest:
If host sets level limit and you're below it - game is still on the list, below suitable games but marked red instead of orange. Yet, you can use filter to show only games suitable for you.
Advantages:
Guests can see games set to "No guests" which will motivate them to register.
In case of many "No guests" or "above your level" games currently in lobby it wont seem so empty.