A few things to know about character experience points and how heroes "level-up" within the game.
As heroes defeat monsters, make good decisions and are otherwise rewarded by the gamemaster, they receive experience points. All characters begin their adventuring careers with zero experience points, and, as they accrue these points over time, eventually "level-up" and gain additional power and status. Players should always look for opportunities to gain additional experience points, especially outside of combat (again, the gamemaster will often reward good decision-making with bonus experience points, not just from the slaying of encountered monsters).
When a character reaches enough experience points to gain a new level (see the Classes page for specific amounts of experience needed to ascend to a particular level), that hero will automatically gain the new level--the player does not have to do anything special. Upon leveling-up, the character will automatically receive at least one hit point (normally more, depending on class, level and character Constitution) and the hero will then begin his journey toward the next level.
For magic-using classes (clerics and magic-users), note that when a hero levels-up, they also receive a new spell slot. At that point, the player must click the MANAGE SPELLS button and manually assign an appropriate spell to that slot. Don't forget to do this! Without manually selecting a spell for the new slot, the character won't be able to maximize her new powers having gained the new level.
Level drains drop a hero to the midway point of their previous class level. For example, a fourth level cleric who is level drained would become a third level cleric with 4500 experience points (halfway between third and fourth level). Another energy drain would reduce the cleric to second level with just 2250 XP and yet another drain down to first level and 750 XP (heroes can’t be reduced below first level no matter what). When level drained, maximum hit points are recalculated for the decrease in level as well.
After the level drain, a hero continues to gain experience like normal, and if enough experience is gained to match the original number of experience points before the level drain, the hero is no longer considered level-drained and her maximum hit points becomes permanent. If, however, you visit a city temple where the level drain effect can be negated, the hero is returned to the number of experience points acquired when the level drain occurred. Hence, it’s definitely best to seek treatment at a city temple as quickly as possible after a level drain incident.