Hypoxia arises in tumor regions with insufficient oxygen supply and is a major barrier in cancer treatment. The distribution of hypoxia levels is highly heterogeneous, ranging from mild, almost non-hypoxic, to severe and anoxic levels. The individual hypoxia levels induce a variety of biological responses that impair the treatment effect. A stronger focus on hypoxia levels rather than the absence or presence of hypoxia in our investigations will help development of improved strategies to treat patients with hypoxic tumors. Current knowledge on how hypoxia levels are sensed by cancer cells and mediate cellular responses that promote treatment resistance is comprehensive. Recently, it has become evident that hypoxia also has an important, more unexplored role in the interaction between cancer cells, stroma and immune cells, influencing the composition and structure of the tumor microenvironment. Establishment of how such processes depend on the hypoxia level requires more advanced tumor models and methodology. In this review, we describe promising model systems and tools for investigations of hypoxia levels in tumors. We further present current knowledge and emerging research on cellular responses to individual levels, and discuss their impact in novel therapeutic approaches to overcome the hypoxia barrier.