Normal doesn't mean sensible though. Having worked at a company that does this, there are high performing IC2s that I'd trade for IC4s (to use comparable "levels" here); so I'm not sure what this does other than declarative justification (across tech).
This is kind of the main problem. You should't have employees at IC2 if they are IC4 worthy. They will just try to find another job, instead of waiting 5 years before reaching a level of someone who is performing same or worse.
Well, it's just a pay band. The explanations are post-hoc, because you can't get promoted by following them or anything. You are supposed to live up to them at performance review time, and how that works is different at different companies.