In ArcheAge, as with most games, your level is an indicator of how much experience one has accrued. As you may expect, when you increase in levels, more content becomes available to you and your stats will increase.
New character's classes start off at level 1, but after having reached level 10, all other classes that you didn't choose as your beginning skillset jump to level 10, ready to be leveled later.
The current level cap is 50.
The 5v5 Arena unlocks at level 40.
The 1v1 Gladiator Arena unlocks at level 50.
Instances usually have a minimum level requirement.
Most quests have a minimum level requirement.
Classes unlock skills at regular level intervals of 5. (15, 20, 25 and so on)
Skills rank up as you level up the skill tree, increasing their cast time/effectiveness/cost and the like.
As you level up, you gain additional skill points to be spent on skills.
Experience to level up chart.
The amount of labor you have to pay to receive a blessing from a Nui Priestess after death is equal to your level.