It does refer to the level of education, i.e. reading and writing.
From The Times 2nd May 1844
Respecting the degree of instruction of the persons taken into custody, the document proceeds to show us that out of the 62,447 persons so taken up by the police, 11,336 males, and 5,682 females (in all 16,918) could neither read nor write; that 25,897 males and 13,170 females (in all 5,823) could read and write well ; and that 654 males and 15 females were of superior instruction.
Stan