Android importing project of different API level

Android importing project of different API level

I am already having one small project in android that is build in API-10.
And i am using the latest version of the API-17 and having the same SDK
manager.
Now when i import this project it shows error like Unable to resolve
target 'android-10' and some more lines.
So, when i Googled about this problem i found that i think i need to
download API-10 and the SDK.
So i wanted to know why its needed?
Because my existing code is built in API-10 then i think it should be
compatible with API-17.
I am new to Android i just understood some concepts like Activity,
Services and many more but when i came around this issue i really shocked?
I just wanted to understand why its needed while i am already having SDK
for API-17?