"These people are younger than you."
Translation:ये लोग तुमसे छोटे हैं।
Yes, those are levels of formality. Actually there's a third one too (आप). Below are the three levels of respect - low to high:
तू / तुझसे = Very informal. When speaking to someone younger / junior at workplace etc. E.g. to children, to waiting staff, when deliberately trying to be rude to someone..
तुम / तुमसे = Somewhat informal. When speaking to someone at equal level, e.g. a friend, colleague... (Note: With very close friends, you might address them तू / तुझसे).
आप / आपसे = Quite formal. When speaking to someone elder, seniors at workplace, during television interviews, etc. e.g. your father, your boss, someone you've met for the first time...