Why is my damage so low?

[ReiMakoto]

Huh.

Is this only character level or itemlevel as well?

Item sync as well, its why ultimate bis uses gear released at the time a lot of the time, because by equipping higher ilvl gear will lose the materia. An "advantage" of ilvl sync is that your substats get sync'd to the cap of that item level tier.

I.E. if you have boots with 120 crit and 80 det, if you're sync'd to a level where the substat cap is 60, your boots will have 60/60 crit/det, despite the boots having less det natively.
Sometimes this is better than having access to your materia, sometimes it is worse, back in SB it was demonstrably worse for tanks as they would lose the bonus strength materia. Its also more clearly worse in situations where you meld for stat tiers like with skillspeed, where if your gear has little SS natively and you meld to make up the difference, losing those melds with an item level sync sucks.