What does the 3rd Order Intercept power level of a Spectrum Analyzer mean?

Intermodulation products of 3rd order are unwanted signals that results from the nonlinear behavior of the spectrum analyzer. The signals appear if more than one tone is applied to the input of the analyzer in close vicinity of the input signal.

The higher the amplitude of these intermodulation products is in relation to the input signal, the more nonlinear distortion is generated by the analyzer. 

The intercept point of 3rd order (IP3 or TOI – third order intercept) corresponds to the assumed input level at which the third order intermodulation product attain the same level as the fundamental. In practice, this point cannot be reached because the analyzer already compresses the signal at lower input levels.