... hence, Class I definition is, "absolutely no harm even if viewed directly" (good news, isn't it)

Class II is "direct hit to eye potentially damaging", Class III
"scattered beam may damage sight", Class IV "causes burns".

More precisely, the definitions are given by power levels (and wavelengths); but this is roughly the reasoning for the classification.

To give some justice to my story, said Class IV argon laser was very rarely operated at power output which could cause burns (IIRC it's specified multimode max was 4W), and in the "classroom setup" it was operated as singlemode (single wavelength only), with output power not exceeding Class II specs (Class IV must not be fired without fully enclosed beampath - OK, in experimental setup, sometimes the rules are maybe violated with appropriate caution, but not when teaching).

JW