The current standard dominating the MMO industry regarding character development and progress today is one of a level based structuring. Dominant or not though is this really the best model that designers have at their disposal? Another model out there, slowly fading from the MMO market, is that of a skill based model.
Veteran MMO gamers will likely have immediate points of reference for previous, and possibly even currently available, games built around skill based leveling rather than the character level system most MMO players have become accustomed to. The skill based model has seen many variances in handlings, but one thing most players that have truly enjoyed such systems may agree to is that a skill based model for character progression is much closer to a 'real world' feeling.
For example; a squire to a knight back in medieval days may not have been proficient with the knight's armor equipped, or even possibly at utilizing the sword and shield of their mentor, but this did not ultimately restrict them from equipping such items to make use of them, regardless how poorly. In most MMO games out today, not only are pieces of equipment bound to players rendering them unable to redistribute or sell them to others once they have exhausted their need, but even unbound items are typically restricted to the level of the character involved. So although in the real world, the squire may not be best with using the knight's sword, he could certainly use it to behead a captured rabbit for food. While in most MMO worlds if the squire is not as high a level as the knight, and/or if the item is bound to the knight, the lower level squire is unable to make use of such items.
Now some of the modern gamers, that have had little to no exposure to a successful skill based system, may not see the relevance of which is truly a better way of handling character progression in an MMO. Most video games single or multi player involve some measure of a level system for unlocking quests, equipment upgrades, and ultimately to track the progress of the player. The level restriction on quests, equipment, and the like; typically work to create a measure of balance and progression for the overall game, but when bringing the single player and even multi player into a massive online world the scope of the game and its overall 'progress' can, and often will, change. The key element all gamers seek is to be and feel truly entertained.
While one player may find player versus player (PVP) to be their point of interest, another may be enthralled with the crafting system, or possibly just the overall social aspect or content a game may have to offer. The key element of entertainment these players share in is what in theater is referred to as 'the suspension of disbelief'. In theater, this is the moment where you as a viewer, though separate from the events taking place before you, feel truly involved and may find yourself crying in a sad movie or cheering aloud over achievements portrayed. What this means ultimately, is that your rational segregation of reality from the non-real is in affect 'suspended' creating a moment where the 'real' is bypassed for the fiction the entertainment is providing. Many a gamer MMO or otherwise can attest to at least once, if not many times, when getting 'into' their game discovering what felt like an hour or two was actually much longer. This would be a simple example of disbelief having been suspended. An actual dissemination from reality, resulting in lost time.
In a single player game this element is not nearly as important as it can be for the MMO player. The single player game, you can play to completion; sometimes reaching the top level available to achieve, sometimes completing a game prior to as much. Once the single player game is completed to success however, it is over unless you wish to play the game again, or as some today offer play it again in a harder mode. In the MMO game, once you achieve the top level, most agree this is when the real game will begin.
As players of level based MMO's will often point out it is the 'end game' content that often determines the continued success of such games. The ability for the game to continue to inspire your playtime even though you have no further character progression to achieve. Players of skill based games however tend to find and even in some cases invent games within the game furthering their own measures of entertainment. Similar to the level based games there are always equipment upgrades and acquisitions to inspire the interest, but the real difference is much more evident in terms of the crafting/gathering side of the game. While the level based crafting may have an evolving economy from newer players gathering resources for selling to veteran players, the skill based game's resource gathering can become possibly as strategy based as the combat since there are no levels involved for the 'zones' from which the materials can be acquired. While the level based 'end game' is simply a game of repetition for acquisition, the skill based 'end game' can often yield a number of various entertainments of which any players new or old can often take part.
Getting back to the 'suspension of disbelief' and its relevance when comparing the two systems; while the level based player may indeed have moments where they feel truly immersed in their game, the restrictions levels impose stand as a constant reminder you are indeed only playing a game. As MMO's such as Star Wars The Old Republic™ have begun introducing interactive cinematic elements to the industry; the intersection of video games and theater truly begins making itself visible. Reinforcing the relevance of making players feel truly immersed.
While major MMO successes such as World of Warcraft™ have managed to gather huge followings since being released, they now are struggling against their competitors not because of better games but simply due to boredom from repetition setting in on their player-base. While one of the earliest MMO's still running Ultima Online™ has definitely suffered negative impacts as each of the new competitors' games have been released, it has still managed to maintain to this day a successful skill based MMO. Unlike many of those same competitors the subscription rate and plans for Ultima Online™ have only ever seen increment of the fees to play, and even though many of their servers are nearly vacant of players they have decommissioned none of them. Certainly the fact that their game is from a 16 bit era has something to do with this, but all this truly evidences is the fact that even as their servers may deplete of players, those playing are still finding themselves entertained enough that other than server transfer services (which involve fees paid for performance thereof) they have had little need to address population declines.
What leads to the decline in players for any game, boredom. What reinforces boredom, repetition. While most level based games offer 'end game' content to keep their top level players entertained, what happens with each expansion they release? As more expansions release, the top level increases as well. Inevitably, eventually, many new players may find themselves long bored of the repetition involved with leveling, let alone the repetition available if/when achieving the top level. While both the level based and skill based games may have events for players to get involved in, to break from the repetition, only the skill based game does not restrict such events based on how long a player has devoted themselves to the game. Granted the top skilled players will stand much better odds against whatever challenges may be presented, it does not inhibit their newly playing friend from joining them and taking part.
Certainly there are a great many pieces to the puzzle that ultimately make up a truly successful MMO game. Most judge the success of the MMO on the numbers attributed to the dollars, but persistence and player interest are the foundation by which those numbers are built. While the high levels may give a measure by which completion of a game can be judged, as those levels continue to increase it's only a matter of time before the player-base begins to reduce taking those dollars with them as they go.