Inspired by the recent thread on classes. Do levels mean anything in your game?
Sort of. People understand the difference between an apprentice, a journeyman, and a master, and so...
Do the imaginary people in your game world know the difference between a low-level character and a high-level character?
In broad terms, yes.
As I've mentioned before, adventurers are the rock stars of my world. Low level characters are like a group of kids who've formed their own band: it's not something the majority do, but it's something that a lot of people at least think of, and most people probably know someone who has at least tried. Of course, very very few of them get anywhere.
Mid-level characters, then, are like those few bands who manage to get signed to an agent. They're much rarer, but again it's not unheard of. And now people start coming to you with gigs...
High-level characters are the big established artists, who are pretty much household names. While the highest-level characters are the Beatles, Queen, or U2 of the world - they're vanishingly rare, but pretty much everyone has heard of them.
That said, it's not a perfect understanding, because a wannabe with a really good publicist could become a big name despite an utter lack of talent. I'll let you decide who I'm referring to here...
Do the spellcasters really have different "levels" of spells that they unlock?
It's complex, because IMC you only have PC class levels if you're an adventurer - Luke Skywalker became 1st level the moment he declared, "I want to come with you to Alderaan. There's nothing for me here now. I want to learn the ways of the Force and become a Jedi like my father." And he didn't hit 1st level until that point - everything prior to that was just background.
Non-adventuring NPCs may have powers and abilities that look like those of adventurers (and especially the ability to cast some higher-level spells), but they're
not members of the Cleric, Wizard, or whatever class.
That said, there is some difference between the acolyte who can cast
cure wounds and the high priest who can
raise dead. People are aware that the latter is the greater miracle. But they wouldn't refer to it in terms of levels, and they also wouldn't be able to put together any coherent categorisation of what spells lie in which levels - it's entirely possible that that high priest may be able to
raise dead but has never mastered the 'trick' of
cure wounds!