Hi! While my group at the Games.com HackAThon were discussing our game, we had a discussion about levels... about whether or not we needed levels in the game. For me, I automatically think a game has levels but there are games, even RPGs, without levels. I can remember arcade games that would go on infinitely until you messed up.
But usually, a game has levels that get progressively harder and harder. This topic is related to last month's topic of Pacing. In a puzzle game, the later levels are supposed to be harder than the early levels. In a RPG, new content is level-locked. You can't learn something or go somewhere until you reach the appropriate level. The level indicates your dedication to the game. It's a way of comparing yourself to others and the act of leveling up gives you a feeling of accomplishment.
I jumped into the beta of Age of Wushu, which has been reported to be a MMORPG without levels. It's what you called "skill-based," which to me is kinda like levels in that you have to learn the first skill on the skill tree before mastering more advanced techniques. What are the advantages? I guess you're customizing your play experience. If you want that skill, you can go down that path and you can do it at your own pace.
What do you think? Which way works out better: levels or no levels?