It makes a whole lot of sense. New players will not be invaded by people who purposefully stayed low level (or used a trainer) but still have +10 weaponry.
Also, yes. If you have for instance a +3 rapier, and that's your highest leveled weapon on that playthrough, you will be matched with players who have weapons up to and including +5. This way the invaders are usually a bit stronger to balance the fact that they have less estus and often have to fight multiple phantoms besides the host.