A level in role-playing games, such as the Shin Megami Tensei series, is a measurement for how strong a character currently is. Higher-level characters generally fare better in combat than lower-level ones.
A battle unit's level serves as a general indicator of how strong they are, as higher levels indicate a higher stat total. For most games the level cap is 99, but some bosses (most commonly final bosses) can have a level that surpasses that cap as an indicator of how strong they are. In Shin Megami Tensei III: Nocturne' the level cap is 255.
In the old games of the franchise, only human party members can level up by earning experience in battle, which forces the player to constantly update their demon or Persona roster. This has since changed and all battle units in the player's side are able to earn experience and level up. Among the games where only human party members may level up, non-humans may sometimes have an alternative way to get stronger, such as Ranks.
Leveling up will grant a small increase of stats. Whether the distribution of those points is random or pre-determined depends on the game. Furthermore, in most games leveling up is also the way of learning new skills. In games with random encounters and access to the Estoma spell (or an item equivalent of it), either the protagonist's level or the party's average level will determine how effective it is.
The level cap in the game is 255, but the number indicator maxes out at 99. Once a character has reached level 99, the amount of experience to reach the next level will stay constant from that point onward. Leveling up past level 99 allows any character to keep earning stat points, and the Demi-fiend to keep learning new skills from Magatama.
As the formulas that calculate the damage done from regular attacks and maximum MP are affected by level, going past level 99 will also inflate those numbers to extremely high values.
Characters in the game have two different levels: their Character Level and Persona Level. The Persona Level does not indicate the level of their currently equipped Persona, but instead how powerful a Persona they can equip. For example, if a character's Persona Level is 25, they can only equip Personas up to level 25, even if their Character Level is higher than 25.
Personas themselves cannot level up, but can instead rank up after being used a certain number of times in battle. While characters can only equip Personas that have at least the same Persona Level as them, the player can fuse any Persona up to 10 levels higher than the protagonist and leave them in the Velvet Room stock.
By leveling up, the user will gain 3 points total, which will be distributed to certain stats. At Level 1, users will have 10 points total, and at Level 99, 304. However, there are exceptions to the rule, such as Ann Takamaki, who instead has 305 points at Level 99. For individual party members the distribution of the base stats will always be the same at Level 99.
The level difference in battle is one factor that affects the experience they can receive: if the user's level is lower than that of the Shadow's, their EXP total will be higher, and the other way around for if their level is lower.
In battle, the level difference is directly used to calculate the damage. For example, if the user has a higher level than the enemy, their attacks will deal much more damage than usual, and if their level is lower, their output will be cut down. For more information on how levels influence damage, see Damage → Miscellaneous Modifiers.
For the protagonist, the level calculated is his own, rather than the one of his equipped Persona.