Could you explain the last sentence? I especially do not get the function of the second "that".
The Japanese language is made up of several levels designed to fit the appropriate social rank of the speakers and the circumstances. Beginning at the top there is a so-called "court language", which developed in the imperial court
and is now seldom used because virtually no one understands it. Just below "court language" is a highly stylized formal level of the language that is different enough that it resembles a dialect of its own.