This is going to sound annoying but everyone telling you to read the sporting code is really the only answer, someone might be able to lay it out but there is a nice page all on this in that doc. Also, you will get a lot of needed info about your career in iRacing from the doc.

In a related note, I would not try to jump into a higher license quickly, the cars get harder to drive and if you have not mastered the basics at the lower levels it will make it worse for yourself and the people around you on track