The lowest energy level is called the ground state, which is the naturally preferred energy state. As long as no energy is added to the atom, the electron will remain in the ground state.

When the atom receives energy (electrical energy, optical energy, or any form of energy), this energy is transferred to the electron, and raises it to a higher energy level (in our model further away from the nucleus).

The atom is then considered to be in an excited state.

The electron can stay only at the specific energy states (levels) which are unique for each specific atom. The electron can not be in between these "allowed energy states", but it can "jump" from one energy level to another, while receiving or emitting specific amounts of energy.

These specific amounts of energy are equal to the difference between energy levels within the atom.
Each amount of energy is called a "Quantum" of energy (The name "Quantum Theory" comes from these discrete amounts of energy).