A little clarification on item levels. Basically, gear has two levels: The level you can equip it at, and the effective level it is for stat purposes. Up until level 50, these levels are usually the same, but you'll notice dungeon drops (Or items crafted from "damaged" dungeon drops) have a slightly higher item level. For example, I may have an item I can equip at level 15, but it functions like a level 17 item. Next, once you hit level 50 all further progression is from getting better gear. The item levels on gear reflect their power, and higher item level gear comes from harder content.