MiLVL is a personal gear comparison addon that determines whether an item is an upgrade when you hover over it, and places information about that determination in the tooltip.
The tooltip information aims to provide an accurate "At-a-glance" suggestion as to whether or not the item is an upgrade for you, based on your gear, talents and group composition (Potential buffs and debuffs).
MiLVL works by reading your talents, looking at the gear you currently have equipped, as well as which piece of gear you would be replacing and compares them to the stats on the item being hovered.
After determining your race, class and specialization, MiLVL will build a list of the items you currently have and the stats that gear provides.
When you hover over an item, MiLVL attempts to make an accurate guess at how equipping that item will effect your stats, as well as any relevant caps you need to achieve.