Certain unit's abilities and certain spell effectiveness are limited by the 'victim's' level, so higher spell level is required, etc.
No need to worry about the level: as you progress through the game, you will be able to hire stronger units with higher levels.You will have to ditch the 'old' units, or place them in the various garrissons or use them as Sacrifice-fodder. The only 'unit' in the game that earns levels is your Hero
