The lobby filter isn’t a real filter in the sense that it matches you up against people of your EXACT specifications. It doesn’t prevent low levels from joining. It more or less is just a label for your specific room, saying, “I’m looking for a specific range of opponent of these requirements.” It does not do anything to prevent anyone from actually joining, it just informs people. It’s kinda ineffective though, because I’ll put down “Chatty” for MvC3 or something like that, and the only guys who join, don’t say a word, don’t act friendly, nothing.
Capcom may have these labels for their lobbies, but everyone ignores them and just joins anyway, cause everyone is just looking for a win to add to their statistics on Live. The goods ones are the ones that talk with you and take the time to learn instead of jumping from match to match.