what is level from lore perspective?

[Vanifae]

Level is a game play mechanic for balance reasons to and determine the proper challenge for a player or group of players. Even if the monsters are stronger in a new zone or expansion, it does denote the level of danger but overall level is simply a mechanic for players and designers to know how strong and capable their characters are.

Lore wise our heroes are very capable people no matter the level, though often the scope is tied to the level of the threat where at low levels we are dealing with issues that affect just a single city-state to more global concerns at level 50+, if anything the biggest tie between level and lore is the scope of our actions and their impact on the world.

Level 1 we are nobodies, level 10-15 we are recognized local adventurers of skill, by 30 we are local heroes of Eorzea, by 50 we are renowned champions that have a great deal of influence and I expect by 60 we will be big damn heroes hose very presence will influence grand events just like the end of 2.55. But ultimately level is just a gameplay mechanic.

[Niwashi]

Lore wise our heroes are very capable people no matter the level, though often the scope is tied to the level of the threat...

While I agree that the scope of what we're facing is a great deal of it, there is some progression in character skill involved as well.

Remember those first level 1 class quests, where it's a matter of things like: "So you were able to discern one end of the spear from the other. Good." or "Well, you've passed the first test─gripping your knife by the handle and not the pointy end." At level 1, we really are considered to be brand new at this, having just picked up a weapon or tool for the first time and not learned how to use it yet.

We're initially chosen by Hydaelyn for our promise and potential, not (yet) for our skill. We start with an adventurous spirit and an aptitude for learning martial skills (as well as other skills if we decide to go down the DoL/DoH route), but we don't start out already having much skill. That comes with time and Experience. (Experience that's neatly measured in points for gameplay purposes, but is important lore-wise as well for explaining how we go from neophytes to skilled warriors.)