Multilevel inheritance refers to a situation where a class extends another class, and then a third class extends the second class, forming a chain of inheritance. This creates a hierarchy of classes, where each class inherits properties and methods from its parent class. 

Example:

// Base class
class Animal {
    public function eat() {
        echo "Animal is eating";
    }
}

// First level of inheritance
class Mammal extends Animal {
    public function breathe() {
        echo "Mammal is breathing";
    }
}

// Second level of inheritance
class Cat extends Mammal {
    public function meow() {
        echo "Cat says meow";
    }
}

// Creating an instance of the Cat class
$myCat = new Cat();

// Accessing methods from different levels of inheritance
$myCat->eat();    // Inherited from Animal
$myCat->breathe(); // Inherited from Mammal
$myCat->meow();    // Defined in Cat class

In this example, Cat is a subclass of Mammal, which is itself a subclass of Animal. As a result, Cat inherits both the eat() method from Animal and the breathe() method from Mammal, in addition to having its own method meow().