The NBA Summer League is pre-season tournament following the draft where all NBA franchises assemble teams composed of rookies, undrafted, and young players. The tournament's purpose is to give the new players a chance to showcase their talents to fans and team staff while working with coaches to start developing their game. Although the Summer League has recently changed into a tournament format, and does give out a championship trophy and MVP award, teams' main goal is not winning the competition, but rather evolving their young players, thus performance is not as emphasized as evolution.
Players who take part in the summer league are usually those not considered to be 100% ready for the NBA, that is rookies, undrafted players, and third or second year players who did not get much playing time the previous seasons, and many G-League players. Also, the Summer league can be the gateway to the actual league, and so often players playing overseas come to it to impress NBA executives and coaches, and get their spot in an NBA roster.
AAlthough you may hear people talking about "the" Summer League, there are actually more than one summer league. Over history, several different leagues started and ended, and lately, summer leagues have been consistently held in Las Vegas and Salt Lake City. The Salt Lake league holds less teams, while all 30 NBA franchises take part in the Las Vegas league, making it more popular. In the Las Vegas League, all teams play four preliminary games and are seeded based on their wins. After that, a tournament is played and a champion is crowned along with a league MVP, and Final MVP. Most of today's great NBA players have been through the Summer League, and All-Stars like Blake Griffin and John Wall have won the individual awards.
The Summer League would be a notch below the NBA. Not all Summer League players can play in the NBA right away. Some are designated to the G-League before they get their opportunity to play at the NBA level. The NBA is the highest on the totem pole. Next, it would be the Summer League players. Then, it would be the G-League players who are on the next rung on the totem pole.