Character Advancement and the Downward Spiral:
Dungeons & Dragons has always made good use of leveling (as well as treasure) to build and maintain player interest. It's kind of like playing the slots. Kill an orc. Sometimes you lose a few hit points. Other times, you win a magic sword. Or, better yet, angels of leveling start singing, a golden light wraps around your body, and you suddenly find yourself gifted with cool new powers.
Sure, some games play lip-service to making advancement part of the narrative. But how often does that play out at the table.
Worse yet, character advancement can knock a story off its rails. Let's say the characters have earned the enmity of the city watch. The overly-serious Captian Khar is convinced that the party is nothing but a bunch of troublemakers, and he's just looking for an excuse to lock them all in the dungeon. Khar might make an interesting subplot when the characters are first level. They're broke. They have no power, no authority. They can't defeat his guards. His shadowy presence can keep them on their toes.
But what happens when they reach 5th level? 10th? 20th? As the characters grow from being wet-nosed noobs into heroic pillars of society, Khar loses his appeal as a nemesis. Of course, the DM could make Khar advance as well. Heck, why not have the whole watch advance--that way they're always a challenge. While this can work in the short term, it quickly becomes ridiculous.
The same issue applies to the major nemeses as well. Sure, there are ways around this problem. Maybe the party is peeling the opposition like an onion, working their way--layer by layer--up the nefarious hierarchy. But scaling the opposition to an ever improving character is difficult, and it limits the type of stories you can tell.
Character advancement has always been a central part of RPGs. Off-hand, I can't think of any games that don't use some form of character advancement. Maybe Toon? I don't remember. I haven't played that in over a decade. But it's an open question, is character advancement necessary?
Look at fiction. In most stories, the character's do not advance. In some genres, particularly mysteries, a character may remain constant over an entire series of books--even their attitudes and opinions don't vary. You could read the books in any order--the events leave no trace of their passage. In other stories, the characters change emotionally. The events leave their marks on the character's beliefs, hopes, fears and goals. But, the characters still don't gain new powers or abilities.
Generally, the character's situation should degrades over time. They face setback after setback. The situation grows more desperate and tense as the story twists its way to the finale. Sure, there may be an occasional victory now and then. They may win some breathing space, or find an ally or tool to help them. But the general trend should be a downward spiral. In your typical RPG, the exact opposite is true.
There is one notable exception: the coming of age story. To be honest, genre fiction has a lot of coming of age stories. Here the main character finds themselves in over their head. The characters are often young and inexperienced (sound familiar). They may have powers and abilities they don't yet understand. They must grow into these powers before they can face their main opponent.
This is important, I'm not saying that character advancement is inherently bad. But, if you're going to include any significant character advancement in your game, you need to plan ahead. Look at how other coming of age stories are written, use them as your guide.
The character's growth should be a central part of the story. In the beginning, they should feel weak and helpless. They should learn and grow, but each lesson should come a great cost. These events must leave their marks on the characters, both physically and mentally. Eventually they will have the power and abilities to face their problems head on. That is the climatic confrontation.
Win or lose, the story ends here. Don't just let the characters grow more and more powerful. Don't just throw more and more difficult complications at them. Plan it out in advance. Build to a confrontation. Then end the story.
And remember, there are other types of stories. It's OK for characters to start competent. And, if advancement isn't part of the story, don't make it part of the game. Either ignore those rules, or scale them back so they have no significant effect. In some of my recent games, I totally forgot to award any experience. The players forgot to remind me. Advancement wasn't part of the story, it wasn't important. The character's grew and changed emotionally, to be sure. But you don't need experience points for that.
As always, I would love to hear your thoughts. Please leave a note in the comments.