There're lots of methods of liquid level detection. Float switches of various kinds, whether similar to the old toiled tank float or a waterproof floating magnet actuating reed switches inside a PVC column; conductive buttons in the side of the tank; ultrasonic reflection; capacitive methods as mentioned just before this post; optical means, including reflecting off the surface or optical transmission of the fluid.
Many methods will only give you a "bang-bang" detection scheme: either you're over the limit or under. Other methods can provide infinite resolution so that actual volumn can be calculated and displayed, either as "E, 1/4, 1/2, 3/4, F" or a display that says "34.52 gallons remaining, 18.56 gallons used, 576 estimated miles before the next fuel stop".
Whatever you do, the trick is that it can't be corrosive and whatever you put into the tank cannot leak. As waterproof as silicone sealant is, it's not rated to remain dunked in water, so extraordinary measures are needed, for instance with the capacitive method, to seal the ends of the wires.
One spin off the capacitive method is to loop the two conductors down and back up outside the tank so there are no possible voids in the insulation. In addition, you've effectively doubled the plate area for a higher capacitance to work with.
Dean