This is, for example, to prevent a player of a certain level that is close to the end of the game from invading/doing co-op with a player of the same level that might be still in the first areas of the game.
In this game, it is part of the formula that sets the minimum and maximum range for interactions between players online (co-op and invasions). Soul Memory is the cumulative total of all the souls gathered on a character. What is Soul Memory used for in Dark Souls 2?