You guys are confusing an army's level and each individual unit in that army's level.
Firstly, there is each unit's level. When fighting, a unit gains experience each strike and can use this experience to level up and get new stats.
Then there is an army's level. This determines mostly how many units it can hold. Army level is raised from doing stuff, e.g. going on quests, fighting battles, etc. A player could have a low level army with very high level units.