Not particularly indicative of an on-going problem.  Vagaries of heat and cold and humidity, and differing expansion and contraction rates of wood and metal can occasionally cause a fret to be pushed up slightly out of its slot.  A fret that is too high can cause all sorts of strange noises that are not "sweet music". 

Long ago I was living high and dry in Mile High Colorado.  I built a dulcimer for a customer who lived in sea level Alabama.  When the instrument left Colorado the frets were perfectly level.  By the time it arrived in Alabama two of the frets were raised.  Ship it back to me and the frets were level again.  Rinse and repeat.  The customer had to have the frets leveled down there at sea level; then it played perfectly for as long as it was owned. 

Doesn't happen often, but it does happen.  

Also, some people press down on the strings/frets very hard and the strings will wear notches in the surface of frets made of inferior metal. 

That's why sometimes frets have to be leveled or "dressed".  

I'm looking to purchase a Mastertone dulcimer that is used (3 years old).  It's sycamore and walnut - a real beauty that looks pristine as does the case that comes with it.  The seller mentions in their ad, however, that work by a local luthier has been done on the frets - she states they were "leveled."  My question is for what reason might frets on a 3 year-old dulcimer, which otherwise looks immaculate, need to be leveled?  I've had several much older dulcimers for a long while and never had any frets leveled, and they all play just fine.  Is the leveling of frets on an instrument indicative of some problem?