Let's start, before anything else, by separating the concept of "level" from the concept of "class". Because of D&D, where both these concepts came up and are intertwined intrinsically, there is the idea that you can't have "Level" without having "class". Even in D20, this isn't true. D20 Cthulhu, for example, is essentially a classless system, but has levels.
A debate pro or con for class could be handled at a different time, but today is "level"'s turn.
So what exactly does "level" mean in RPG context? At its basic, it is a concept for representing character advancement, by which a player, over time, improves at his abilities. It is most notable, and listen carefully because a lot of people don't get this, for its limiting qualities, rather than its permissive qualities.
That is, a Level isn't there to tell you what stuff you are getting so much as to tell you what limit there is to the stuff you get.
A lot of people who have issues with the concepts of "Level", in reality have issues with the D&D concept of level. In the latter, when you go up in level, you gain more hit points, skill points, possibly a new feat, and your combat and saving throws all go up.
For some people, there is an issue of "realism" at play with that idea, of across the board advances. Even if a wizard's combat bonus will be lower than a warrior's at 20th level, why is it necessary at all for the wizard's combat bonus to go up, they ask? To them, the idea that spending more time being a better thief makes your hit points go up, or that spending time being a better wizard makes your combat abilities go up, seems ludicrous.
And there's certainly some validity in that. Someone could provide the counterargument that a wizard spending a lot of time around warriors will, even if he never gets in a single fight himself, pick up a few pointers about combat that he could in theory use; but that counterargument is imperfect at best. It doesn't explain why, for example, an NPC wizard who lives in Wizardopolis where no warriors are allowed, and never gets into fights, would get better at combat as he goes up in level.
However, these are not really issues with the concept of "Level" so much as issues with how D&D in particular combines "level" and "class".
Now, if we remember that fundamentally, the mechanical raison d'être of Levels is limiting, rather than permissive, we grasp that Levels aren't really there to "give" you stuff, they're there to give you a LIMIT to where your current "stuff" can be.
In terms of game playability, this is why levels are so incredibly useful. Levels serve to say: "after x number of adventures you can only do +y maximum with ability Z". Whether "x" is reflected through experience points, raw point awards, or some other weirder mechanic is irrelevant. But what is important is that it prevents you from raising ability Z any HIGHER than value "y".
So a Level is really a limit. Its saying that a 7th level fighter can't have better than +7 to fight; or that a 12th level wizard can't cast higher than 12th level spells.
What happens if you don't use levels? Then suddenly, you are left with a system where there is no "y" maximum.
Systems without levels are usually point-buy systems, though not always. In a point-buy system, your only "Limits" are the concept of your own character and the number of "advancement points" you have to spend.
And inevitably, in any unlimited point-buy system I have seen, you will end up with people minimizing-maximizing their skills, abilities, stats in general in order to end up with one or two stats that are radically greater than they should be, and a number that are probably less than they ought to be.
This is a very serious problem, and the disease that leveling intends to avoid.
Because, let's face it, "character concept" is usually a very very frail system of limiting abuse, even in the most dedicated of immersion players. If you see the mechanical value of pumping all 25 of your advancement points into the "shortbow" ability, and therefore ending up grossly overbalanced with the shortbow, you will come up with some "character concept" excuse to justify it.
This is just human nature.
And the very proof is in D&D. Of all those people I see complaining about "why would a 20th level wizard have a +7 to hit?", I have never seen one say "I don't think it fits MY concept, so thanks for the offer but I will just keep my wizard at +0 to hit even though I get nothing in exchange for that".
Yes, they'd probably willingly trade that +7 for a bonus in some other thing (maybe spellcasting), but they'd never just choose not to advance. So basically, they'd willingly choose to min-max, but they wouldn't actually choose to play a character that they knew would be weaker at something they admit is outside their character concept, just because of principle.
And that's human nature too, because if you know that every other 20th level wizard is going to have +7, you don't want to feel inferior or more vulnerable.
Meanwhile, without the structure of level-based advancement, in a point buy system that wizard would be min-maxing his powers just like everyone else.
Now, there are some point-buy systems that impose caps on how many points you can put in a single stat. This is outside the argument, however, because by default the moment you create any kind of cap for advancement you are creating levels! The system in question might not call it levels, but if it quacks like a duck...
Thus, the question isn't really about "are Levels good things"? So much as the question is "what kind of level system do you want"? Do you want the simplicity of across-the-board advancement, or do you want a point-allotment advancement where you can choose what advances, but every stat has its cap?
This ends up being a question of taste, and of what kind of play you want your system to emulate.
But any system that doesn't impose a Level concept of some kind, be it across-the-board-non-exchangeable or points-with-caps, is going to end up being far too vulnerable to min-maxing and thus to game imbalances.
On a final note, there are a couple of other approaches besides point-buy that try to create balanced advancement systems without using levels. Most of these end up being either too byzantine or too simplistic to be really playable.
One in particular, however, does seem to provide a viable alternative: that would be the BRP/Chaosium/Cthulhu system; wherein you only advance in skills you have used in-game, and you only advance via an advancement check. In BRP, this is done by rolling percentiles and getting the percentage value of the skill or higher, and gaining a die's worth of advancement in that skill.
This sort of system is eminently playable, but it does create two new complications that do not appear in level-based systems:
1. there is no simple way to reflect study for the gaining of new skills. In Cthulhu, someone can go through training (usually college courses) to gain advancement in a new skill he does not already have. However, with certain skills this doesn't seem very logical (what exactly would constitute a six-month course in "dodge"?) and it also leads to people potentially trying to maximize their "study" time in order to abuse the system.
2. This system creates a tendency to try to "use" as many skills as humanly possible in each session, again to maximize the number of checks you get. This was at its worst in systems like Runequest, where players would literally go around with wheelbarrows of weapons and try to hit with each weapon once, in order to go up in each different weapon skill.
This second problem can be moderated by making skills more generalized and less specified (so that the players don't feel pushed to use a different weapon each time, since they'll gain in a "weapon class" rather than a "weapon type"), and by judicious GM standards of what constitutes a "Valid" skill check that warrants an advancement at the end of the session.
The first problem is resolved mostly by time constraints and GM use of common sense to limit how many "courses" a player can take to gain new skills.
Despite these problems, a BRP-style "use only" advancement scheme is still usually far more balanced than a no-limits point-buy level-less system.
So there you have it. The conclusion is that Levels are not just good, they are practically essential to a balanced system, with very few exceptions. The real issue is in finding a Level mechanic that actually suits your likes and needs.
(Originally posted January 13 2006)