You are automatically de-leveled to the appropriate level of the content you're in. You can be level 80 in the starter zones, but it will lower your stats (including your gear) down to level 5. That means you can go back and play with friends, help alts, whatever. It doesn't work the other way, however; you can't be level 5 and be buffed up to level 80, for example.
Should note that it does for PvP though.