Kohlberg's theory of moral development proposes 6 stages grouped into 3 levels - pre-conventional, conventional, and post-conventional. In the pre-conventional level, morality is based on obedience and self-interest. The conventional level focuses on maintaining social norms and relationships. The post-conventional level assesses morality based on social contracts and universal ethical principles. Kohlberg used the Heinz dilemma to understand how individuals at different stages would reason through a moral problem.