During your first expedition into the world of Warcraft, your character will be a nobody with only a few basic skills. They cannot hold their own in combat against skilled opponents. They do not know the techniques and abilities necessary to flourish as a member of their class. In short, they must learn how to become a hero. By gaining experience, your character will eventually grow in knowledge and ability, and be better able to withstand the rigours of combat.
Experience is earned primarily through combat. By defeating opponents close to you in level, you will earn some number of experience points. There is some amount of experience you need in order to progress to the next level. You can view this progress on your experience bar.
Rest Experience is gained when logged out. Rest experience increases the amount of experience you gain per kill. The rested experience gain is much higher when logging out in an inn. Before, rested XP was only gained while inside of inns. But now rested XP can be gained while logged out anywhere while logged out. See Rest Experience.
Another common source of experience is quests. Completing a quest will reward the player with a significant amount of "exp", and also give them a sense of purpose to why they are out roaming the world. Exploring new sections of the map also rewards some experience, but this is fairly minor.
Your level is marked in a small circle next to your character portrait. Your level will dictate which skills you have and which opponents you are likely to be able to handle. When your experience meter fills up completely, you will gain a level, which will also result in a large flash of light around your character sometimes referred to as a "woosh" or a "ding".
When your character gains a level, the game will inform you of some immediate changes to your character, such as increased health, mana, and other attributes. You will also gain one talent point (starting with level 10) and, generally on the even-numbered levels, enable your character to receive new skills from a class trainer.
Aside from new skills and stronger attributes, your character's skill caps are also increased by 5, you will have access to new quests and items, and at a few specific levels there are some other benefits such as being able to purchase a mount or being able to increase your tradeskills levels.
See also: Level Cap
With the initial release of World of Warcraft, players could increase their level as far as level 60. Once they reached level 60, they could no longer gain experience and had to find other meaning in the game. With the release of Burning Crusade, this level cap was raised to 70. It was increased again to 80 with Wrath of the Lich King. It is expected that each expansion will continue to raise the cap by another 10 levels, and it has been hinted at by Blizzard that their intentions are for players to eventually reach level 100.
While a player at the level cap can no longer gain experience from killing creatures, experience from completing quests is converted into gold, making questing a very lucrative source of income once leveling is complete.
For additional tips, see the Efficiency Techniques section of the introduction to Azuarc's leveling guide.