Lucky to have played all 3 levels and tbh the difference isn't great for a player wanting to make the step up. Once you get your head round the boring banter, a bit of extra pace and the batsman being more ruthless with bad balls, most decent cricketers can adjust to as higher level. The condition being they have the ability to make that grade. Quite often seen our best colts jump from 3rd to 1st XI successfully, because they have the ability to improve and meet the standard. In terms of the actual difference between levels:-
3rd XI - 1/2 bad balls an over, fielding so/so, batting pretty weak after 6, top 6 batters are either over the hill or decent colts
2nd XI - 1 bad ball an over, fielding generally sharper and most catches taken but still plenty of unfit guys, batting tends to be more experienced and deeper normally down to 8/9 can bat. You start to get guys bowling bouncers and some extra pace.
1st XI - 1 bad ball every 3 overs, fielding sharp fewer singles are most guys are fit, catching good and the batters more aggressive and ruthless. A few rapid bowlers and the most bowl 65-70 mph+.
Just my thoughts, but I know Reading and they are amongst the elite in the Home Counties so it might be a little different as they have 4/5 very good sides. There 2nd xi is almost the same as many other teams 1st XI.