Leveling Up will not increase any of your stats,it will only show how experienced you are and increase your XP pool for spending. So, in theory and practice a well spent LV 1 player can easily defeat someone LV 10+. Increasing your stats will come from spent skills or found stones across the world.
jasperstones will increase your max Health.
jeagerstones will increase your max Stamina.
Esperstones will increase your max Mana.
along with other stones like whetstone, soapstone, coprostone and so on.
these stones will either be rewarded and or be a rare drop.