Changed the heading for you.
The highest level that Heroes and Dragons can achieve is 60.
Other units can go to level 20 (that should include the Dwarven Rifleman, but there might be a bug, so we'll look into that). The level 5 cap for training in towns is just so that you can only get the highest level units through playing the game rather than just spending resources.
For PvP, players are matched on army strength so instead of maxing out all my armies, I'd have a mix of strengths to increase my chances of finding a battle. I've had more battles with 200-400 strength armies than I have with 500+ ones.