To unlock the ability to create a level, you MUST complete all of the levels in a single location first. The Classroom is the easiest and has half the levels of the other locations, so start there. Once you unlock the level creator, from the location selection screen, slide over and select "My Levels." Hit the red "+" symbol in the upper right corner to go to the level creator. The only requirement for making a level is that it must have 3 stars and have the objects to collect them.
Do this by placing a vertical line of stars and a ball above them to collect them (see picture below). Then hit the play button in the top right corner to test the level. If your ball collects all three stars, you can proceed to the next stage of level creation by tapping the check-mark button in the top right corner. Now you need to drag the ball back down into the toolbox (lower right corner of screen) and confirm your creation with the check-mark button. Achievement unlocked!