Basically, the game monitors your performance based on a number of variables (Health, ammo consumed, life span of enemies, etc) in each level. Then, when you complete the level, the game uses these metrics to build a brand new map that will challenge you based on your performance in the previous map.

So, lets say in the first level, you barely make it to the end. The next map will be custom built by the mod based on your poor performance. So it would be a smaller level with less enemies, and maybe a few side rooms with additional ammo and health.

Now let's say you beat the first level without being touched. The next map will be custom built by the mod based on your awesome performance. So it will be a larger level, with more enemies, less items to make it more challenging for your advanced ability.

Does that make sense?