You have a level for each location or puzzle that increases as you progress through the game.
Progress is added each time you explore a location or solve a puzzle. When the progress meter reaches 100%, the location/puzzle difficulty level will increase.
The higher the difficulty level of a location/puzzle, the more rewards and experience you earn. A quest's difficulty increases as well.
Altogether, there are 10 mastery levels: Novice, Amateur, Connoisseur, Sleuth, Detective, Virtuoso, Expert, Master, Grand Master, and Magister.