Let me start by saying this: I'm against levels to begin with. I think that they are a substitute for fun and they work by encouraging compulsive behavior in a method that is similar to gambling.


Let me first start by saying that getting rid of physical levels isn't the right answer. Did anyone remember FF10-2? While each character had a level, it was her class that determined what her stats were in that game. That's kind of like what the relationship between class and physical levels should be like in this game. If you've got a physically strong PC, he should always be strong no matter his class. But the class he chooses should have some kind of multiplier for his stats. You pick one class and you'll still be strong, but maybe just a little stronger or weaker than you were in another class. And there should probably be multiple ways to tailor your class. For example a gladiator might want to be a tank, offense, or a hybrid melee caster (spell sword or paladin). Those would also change how your class would alter your stats. An offensive glad would have more agility and strength than a pure tanker. And maybe you could further tailor your class by using features from another class. If I wanted to be a paladin I'd have to use some conjurer features.

Now here's why levels are wrong. In most games the progression of the game is like this: you start off playing basketball in the newbie levels, then you play baseball for the middle levels, and when you get to endgame you start playing football (the real kind, not kickball). In other words you never have one game or you aren't focusing on the endgame. Likewise because you have levels, you've just closed the book on people accessing content because:

1. They are too low in level to access that, come back again later.
2. They are too high in level and the content is no challenge for them.

The main storyline in FF14 is a perfect example of this. You do a story quest and then once you've done it you have to piss off for 10 levels doing nothing but grind so you can move on to the next part of the story. Now if there weren't levels you could access everything in turn. Maybe revisit old plot points or go see how things play out in a different city. You aren't forced to grind and can play at your own pace.

Now yes you might have people complaining about character development (which is completely different from the use of the phrase in books, movies, and anime, which is odd for this is an RPG after all), but what is that mythical character development? Basically it's running on a treadmill. You see, because of leveling, people get addicted to growing in power on a regular basis. It's the carrot that you dangle in front of them. Then they reach max level getting their carrot finally and then seeing instead of playing for the yankees, they've just been drafted by the detriot lions. At that point they realize things suck and not only do things suck, but they no longer have a carrot in front of them. It's at this point they want more levels, ie another carrot, and want to go back to the same old thing largely because they weren't prepared for this new game at all and they don't like it. So they either whine for more levels and all the content that they think should go with it (see previous point) or they create an alt because the Lions suck and they like baseball better.

And then there's the elitist jerks who like being at a higher level than everyone else and can't stand the fact that us little people are the same rank as they are.



So how do you do character progression (I'm calling it this so we can leave development for the storyline) in a manner that'll keep people happy?

Simple, you tie character progression (more skills and spells) to how far along you've gotten in the story. You know how powerful a character will be by point X because by point X on the first run through, by definition they have to be that powerful. So if the story has a total of 25 story events, you break the acquisition of skills up so it's all nice and even.



So in summary:
1. Get rid of physical levels but implement a physical baseline that the player can change whenever.
2. Let your class tailor your stats for that class and its flavor.
3. Base skills, the items you can build, whatever, on how far along in the story you are.
4. Let the players go through the story at their own pace without needing to grind levels.