Now, levels scale differently in different games. In AD&D, level 10 is high-powered and level 20 can beat up dragons without trying too hard. In Maple Story, 10 is "we can finally let you off of noob island".
Here, you can get to level 15 in 4-8 hours if you try. You can get to level 30 the next day if you know what you're doing. Content starts to taper out around level 120 or so. Past level 150, you're pretty much spinning your wheels. There's talk of more content, but not much yet. There's a level cap, currently around 200. Cedric and Falco's high-level characters probably gain a level every week or two. They're in the top 1%. They can grind for hours and not get anywhere much, which is why they have other, lower-level, characters.
A character with great equipment can function about three to five levels higher than a average equipment. Most parties have characters who are within 5-10 of each other.
I really like the idea of a game with no levels and no classes, just a point-buy system. You could spend 10,000 xp to raise your Fire Blast from 5 to 6, or you could spend 200 xp to raise your Climb Walls to 1.
However, there are three problems with it. Firstly, levels are a very useful shorthand for character power. If somebody says that they're a level 50 mage, then you know they've got the same basic powers and abilities of any other level 50 mage. Otherwise, you don't know if you've got a powerful swordsman, a thief with low-level trapfinding abilities, or what. You don't know what kind of challenge would be appropriate for them. But you can tell that a level 50 mage wouldn't last ten seconds in the Jagged Time Lapse, but would be able to fight things at the Exploding Mines.
Secondly, there's equipment. You want there to be a steady climb in equipment quality, so people try to get the next thing and upgrade. If nobody has levels, then what's to stop somebody from giving an Helmet of Awesome +50 to a new character? The alternative, giving characters a separate skill in wearing clothing, is ridiculous. You're a knight. Your body is a finely honed combat machine. You move with honor and deadliness. But wearing shoes? Nope. Not your strong point. If you want to put on Boots of Speed, you need to get a whole bunch of practice. And you can only learn how to wear those boots, by killing things.
Thirdly, levels give a sense of accomplishment. A MMORPG wants to keep people hooked. Watching the numbers go up does that. It gives you an idea that you get something for your time.