It is guessing the wand level roughly based on its stats, but only uses that for deciding which spells to add (so you don't get level 6 spells on starter wands etc). For the stats it does not care about wand level.

If you stand on the anvil while holding a wand, it’ll show you its level

Oh that was a feature that I had once tried out but removed again, probably because it didn't really matter, I forgot, it has been forever :)

I have heard people complain about the stats getting worse on average, but at this point I feel it might be too late to change the default buff amount, since so many people got used to it and would probably dislike a sudden change.