Any method of leveling needs to have a mechanism to average the heights of various points.
Category 1: 3PH full lift. (Only supported by the 3PH) You are cutting at a level determined by the tractor wheels. There are two issues with this:
1. If the ground is bumpy, then when the front wheels go up, the implement bites deeper. If the distance between bumps is wrong, you can actually magnify the bumps. This is how washboards form on gravel roads.
2. Tractors run fairly low pressure in their tires. The tractor tilts to the outside of corners, and to the downhill side of hills.
Answer: Make your first pass so that it is contact with the ground only 10-20% of the time. As you get it more level, you can take off longer slices.
Category 2: 3PH with gauge wheels. Now it's the back wheels of the tractor and the gauge wheels that determine the cutting point. A lot of the time, the gauge wheels are near the cutting edge. This is fine for gopher hills, but doesn't work if the bumps are wider than the blade. It also doesn't work well for long swells (A 6" high bump spread out over 12 feet.
Ideally you want gauge wheels that are several feet behind the blade. And the blade should be half way between the tractor wheels and the gauge wheels.
Category 2b Drags.
One common form of tool that uses this principle is the common drag. Multiple blades on a frame that is tractor wide, and 10 to whatever feet long. Ignoring individual gravel, the drag is touching the ground in only 3 points. (Ever try to get a 4 legged table to sit right on a bumpy lawn...) At those points it's taking material off. The three points will be different from second to second. A drag only takes the highest spots off -- and only bumps that fit between the sections. But a drag can move at high speed, so having to go over the land several times is not a big deal.
Category 3. Active blade positioning. These are much longer, much more expensive units that position the blade with hydraulics depending on the flex where it couples to the tractor. The blade mirrors the relative motion of the front wheels. If the wheels rise, the tractor is coming out of a dip, the blade raises some to let more material spill.
Category 4. Laser /GPS leveling. A rotating laser is used to establish a plane. A sensor mast rides above the blade, and continuously adjusts the blade. Couple this with differential GPS and you have the landscape version of a numerical control milling machine. This sort of precision is useful if you are setting up pasture for flood irrigation, and you want a constant 1 foot per 100 feet slope over a 40 acre field.