Yes, it is a mess, I'll try to whittle it down to a few thousand words.
Last season the Battery was in USL1 and Austin was also one of the teams. During the offseason, a group of owners/investors (some from USL1 and some that didn't even have a current team) wanted to break away and form a new league which they called NASL. The new league and USL talked forever and both sumitted applications to US Soccer for sanctioning. US Soccer basically said "I'm not sanctioning either one of you....you both still have work to do to prop up your league. So, for this year only, US Soccer will run a league with teams from both NASL and the remains of the old USL1 league." This temporary hodgepodge league is called "US Soccer Division 2" and it has 2 conferences, one called "NASL" and the other called "USL". Here is another link off of Talon's link above that shows that setup:
http://ussf.demosphere.com/Schedules/2010/20952154.htmlNow, while all this was going on during the offseason, the future of USL1 was unknown, there was a chance there would be no league. So, for that and also for cost concerns, the Battery dropped to USL2. If all this wasn't muddy enough, the naming convention adds confusion because the US Soccer league has a "2" in the title as does the Battery's league (USL2). The US Soccer league is the 2nd division (for now) and USL2 is actually the 3rd division. But hey...this is how they do it in England (League 1 = 3rd division, etc.) and they invented the game!!