I read about Ethereum’s Layer 2 Scaling Solutions. Understood that layer 1 is the base consensus layer of ethereum protocol, changes typically require a hard fork. Is it true that layer 2 here refers to all smart contracts that deployed on the network. In that sense, to perform transaction on Raiden Network we are actually utilizing a smart contract deployed by the Raiden team?
Layer 2 means any scaling mechanism that isn't programmed into the Ethereum protocol, i.e. it has no specific effect on consensus. This includes state channels (which Raiden would fall under), Plasma, and Truebit. All of these scaling solutions heavily make use of smart contracts.
In that sense, to perform transaction on Raiden Network we are actually utilizing a smart contract deployed by the Raiden team?
Not exactly. If every transaction on the Raiden Network interacted with a smart contract, it wouldn't really be a scaling solution, since it wouldn't decrease gas usage on the mainnet. Raiden uses deposit state channels to create a payment channel network where you can send people signed messages off-chain that they can then claim on-chain later.
Layer 2 is a protocol built on top of Ethereum which give it new properties like Loans, Recurring Subscriptions, tackles Scaling issues, and more. Layer 3 would be what you are maybe use to, and will be the forward facing applications for user interface.
Layer 2 will be modular protocols that you can include in your layer 3 applications as you need them.