While the level cap is debatable...
Gandalf is MYTHIC for sure.
That he is certainly mythic is the indirect evidence we have that he ought, seemingly, to have broad power. The more difficult question is to what that off screen power translates in D&D terms. Gandalf as an Angel of Wisdom in his fully revealed form probably has something like deific style domain powers, although we are given very little clues as to what they might be, but there isn't a lot sign that he - or even any of the Valar - otherwise has Epic power in the D&D sense. And certainly as an Istari, he has voluntarily given up his glorified form. Any omniscience type ability we might associate with mythic personifications of wisdom isn't actually present when he's is amongst the Children of Iluvatar and in their form.
At some point though, we are just wildly spinning based on things we can't really establish from the text. As Gandalf the Gray, he uses quite a few spells and those spells typically in D&D terms are 3rd level or less. So perhaps we ought to say that Gandalf is at least certainly 6th level in D&D terms, but beyond that we can only speculate.
And just for the record, so we can establish a few ground rules about what needs to be said and what doesn't, I've read The Hobbit in excess of 30 times, the Lord of the Rings somewhere above 16 times, and the Silmarillion somewhere above 5 times. I've also read 'The Lost Road', 'Morgoth's Ring' and all the various 'Lost Tales' and Christopher compilations of his father's notes. I read secondary Tolkien criticism and own copies of same. My freaking real life nickname is in Sindarin. So, we don't need to establish basic tenants of the cannon.
Calling folks names, even when they aren't present, does not elevate your discourse.
For the record, I'd have no problem saying so to his face either, nor was elevation of the discourse my intention. My intention was to clearly place culpability for Gandalf's actions in the movie where it belongs using unambiguous language that I was sure the OP would understand.
As for the myth that Gandalf doesn't use many spells, I would say, "Compared to what?" Gandalf employs a considerable number of spells in the Hobbit. What I think we have though is literary power creep. Gandalf represents an early edition or version of the non-occult wizard in literature. At the time, Gandalf I think compares favorably to other literary wizards in terms of the scope and utility of his magic. It's just that any wizard that comes after him, tends to try to out Gandalf Gandalf.
Against the Trolls, Gandalf employs ventriloquism and trickery to make each troll think the other is talking. This isn't implicitly called out as 'spells' or 'magic', but note that in Middle Earth any sort of superhuman skillfulness is the same as magic, and in early editions of D&D (which lacked skills) the same sort of thing is true in reverse. If you wanted to emulate voices and make your voice seem to come from somewhere it wasn't, you were using a spell. One of the first time's Gandalf is in a pinch, versus the Goblins, we see him cast in quick succession Lightning Bolt, Invisibility, and Pyrotechnics. Later versus the wolves, he employs some sort of spell that turns pinecones into fiery grenades (some sort of 'Produce Flame'). After that, Gandalf largely leaves the story till the very end, when we again see him employing invisibility and the like. In the Lord of the Rings, Gandalf employs among other things fireball, knock, and hold portal.
One of the few times that Gandalf is seen employing magic casually is in his smoke ring duel with Thorin, but even then, Gandalf has an object. Bilbo has just made a terrible first impression on Thorin, committing the cardinal sin of losing his composure, and Gandalf has to remind Thorin forcefully of his superior wisdom in this matter.
Gandalf is a big time wizard. No one else in the story comes close to displaying the range and breadth of magical lore he does. When the Hobbit was first published, Tolkien hasn't yet really settled on much of the cannon. Gandalf as Olórin, and even the magic ring as The One Ring are not fully settled on as conceptions. As such, Tolkien isn't even trying very hard to present Gandalf as this hidden source of power. He's presenting him as this mysterious old wandering wizard that does all this fantastic magic.
We've become rather jaded since then, partly as a result of the Wizard as D&D/RPG trope, partly out of standard power creep. But additionally, I think Tolkien is pulling off a literary trick. We hardly ever see Gandalf not use magic when faced with a problem. He's using magic all the time in ways both subtle and sometimes grand. That's what Tolkien is showing us. But what Tolkien is telling us the whole time in various ways is, "This guy... he's really concealing his power. He could do so much more. You really haven't seen a fraction of his power." This increases Gandalf's numinous and mysterious nature, and serves within the story Tolkien's theological purposes, but at the same time it causes us to remember more what Gandalf didn't do and less of what he did. Fundamentally the justification that Gandalf doesn't use a lot of magic, is that Tokien told us he didn't use a lot of magic. Pay no attention to all the fireballs and lightning bolts he slings every time he's uncloaked.
