Leveling up doesn’t make you more powerful but gives you respect among other players and also a way to get tokens. Note that you can only level up you in RRO games and not in user-created games.
The max level you can reach at the moment is 30. It took me a total of around 40 hours of playing to reach this level. I hope that in the future they will allow higher levels as there are quite a lot of players that are at this level.