First of all, Killing Manimarco was a joke. I mean the guy is what? 500 years old? He should be a living god not some little punk you can blow away with a few spells.
Levels should not be an expression of skill and experience. Levels should not be acknowledged by NPCs because that is irrational. Give me a task that requires a certain display of skill in any given area of expertise, and if I succeed, then that is an expression of my skill and experience. I earn my advancement by completing difficult tasks, not by having a level go up. Try stealing an Elder Scroll with a Sneak of 1 without getting caught. No chance unless you use a ton of invisibility spells, and if that's the case, then who really cares what your sneak skill is. If you just use invisibility or chameleon to sneak around and steal stuff, then good for you, you're no worse than the thief who uses Sneak exclusively.
For the sake of argument here, lets say you, me, and 3 others were compared in strength by lifting a weight. For the amount of effort each person exerted each person is assigned a number that places them in relative position to the other people. The person who is the strongest gets to be 10, while the weakest person is 1. The three others in-between get assigned 4, 6, and 7 in relation to 1 and 10. That's all these "numbers" are, it simply a measurement of your skills on a broad spectrum in comparison to other people. People who are masters of a particular talent get high numbers while novices get low numbers.
The number does not define your skill, your level of skill defines the number. I don't know how else to say it, if such a concept confuses you, you are beyond helping. In RPVGs (role palying video games) you create a character with specific attributes and skills, and you control that character in the way you want to. You may try to do specific things, but your successes will be modified and/or defined by by your characters current specific talents.
Level defines your "hardiness" and overall level of experience in life.
If you want a game where you're the best at everything, play call of duty.