There's 2 types of radar in ATC, there's Primary Radar which gives bearing and distance, but it can't give altitude, which is why there is Secondary Surveillance Radar (SSR) which interrogates airplane transponders. When a transponder is on and set to mode C or S the controller will see flight level on their screen. Flight level is altitude adjusted to standard pressure (1013hPa):
When a controller gives a traffic report and they haven't had a reported altitude from the aircraft they'll either report the aircraft's transponder reported flight level or altitude in feet which is the transponder reported flight level adjusted for local pressure. A controller may also use the transponder reading if the airplane has changed altitude since its last report, say because they are maneuvering, doing practice forced landings, etc.