If it's like they have it on a lot of shows, the sets would be on the one level. However certain ones might be placed in another area, except for ones that conveniently fit right beside each other, like the kitchen and the living room.
I'd assume the audience might move around if the scene called for it. The second floor would take place in one area, while the first takes place in another, although not at the same time of course.
I coudl of course be wrong about this, although they definitely would have had to do some different positioning for the rooms upstairs so you can actually see them all. It's hard to say for sure unless you've actually seen it.