Here, let me break it down:
Practice with computers only use to is to practice technical skill. The reason why LVL 1's are more preferable than LVL 9's because LVL 9's have the inane ability to powershield almost all your attacks, grab you when you thought it was impossible, etc. Despite the level of the computers, none of them use mind games. If you stand still, the computer player will simply walk in your direction, which is another reason why using computers as practice against human players is bad. It teaches bad habits.
With that, practicing by yourself omits the ability to develop mind games which is a very essential part of progressing. However, you're still able to practice technical skills such as wavedashing, SHFFL'ing, SH-laser with Falco, etc. When you're practicing by yourself, you're going to find yourself doing the same, mindless, repetitive tech skills over and over again until you've processed the motions into muscle memory. Controlling your character at its highest potential with as little effort possible is your goal when practicing by yourself. Playing your character at its highest potential requires an opponent with a mind.
Therefore the best way to practice by yourself is to simply go into a mode where you can master CONTROLLING your character. Using LVL 1's are helpful because they don't hinder your training with gay powershielding of your lasers or well timed grabs/attacks. It's more important to focus on your own character than your opponent when practicing by yourself.