Kill mobs, explore structures to get the most XP from the mod, and increase your level. Each new level earns you 3 XP points to upgrade an attribute. Mobs also have a level dependent on their dimension.
Attributes and gameplay changes:
Agility: Movement and attack speed. High levels allow the use of daggers.
Strength: Attack damage and block-breaking speed. High levels allow the use of greatswords.
Resistance: Increases armor without having armor equipped. At high levels, allows the use of axes as weapons.
Intelligence: Increases area attack efficiency (increases the percentage by which mobs near the attacked mob take area damage). Considerable levels are required to use hoes and shovels.
Accuracy: At high levels, allows the use of bows. More to come soon.
Vitality: Increases your health by one level = 1 point (half a heart), but numbers less than 20 reduce your health (half a heart per level less, for example, 17 is 20 - 17 = 3, so that's 3 points less or 1.5 hearts less).
Luck: Increases loot from chests, etc.
Arcanum: No effect for now. Afterwards, it will affect mana and mana reg from the Arcane Prophecy mod, another mod of mine, but the Arcane Prophecy mod hasn't been published yet.