From what I read, it's not scaling DCs with regards to the party, it's DCs scaled to the element. So the level 2 blacksmith will always be a level 2, even when the PCs return at level 11. He'll be really easy to convince to do stuff for them then, but being level 2 he can only do so much.
But level 2 could just be the apprentice, and the actual blacksmith is level 7 or 10, or something else, even when the party first comes there at level 1.
Likewise, an area might have a general level, with challenges being near that, with some exceptions (say simple walls and doors you have a set levels for and use them most places, for example).