A little videogame theory, from someone who ponders this sort of business more than is good for him:
We know what XP is in meta-game terms. It’s supposed to represent the acquisition of knowledge. So, the thinking goes, after you’ve killed a hundred orcs, killing the 101st shouldn’t teach you anything new. I could argue this point and we could get into all sorts of simulationist arguments about what would produce the greatest fidelity to real-world behavior, but the truth is that in gameplay terms XP is really a reward for risk and effort.
Most games have you earning XP on an upward curve. As you proceed, the monsters are worth more XP as well, but the rewards don’t quite keep pace with the XP needed between levels. So, maybe you only need to kill ten monsters to go from level 1 to 2, but you’ll need several dozen to go from 5 to 6 and a hundred to go from level 19 to 20. (This is all assuming the monsters you’re fighting are the same level you are.)
Some games feel the need to impose a certain degree of risk on the player. You get penalized for fighting stuff below your level. You’re level 10 and you’re fighting a level 1 rat. That rat would be worth 10XP to a level 1 player (a pittance to you, a level 10) but if you kill the thing you get zero. Most games make this restriction pretty tight, so that even a monster slightly below you in level is worth far less than it was when you were “supposed” to be fighting it.
In your standard RPG / leveling kind of game, the player should always be compensated for risk or effort. The only time a monster should be worth zero XP is if the player can kill the thing in a single hit, without breaking stride. Anything more than that, and the player deserves a reward for putting the beast down.
I think fighting low-level mobs is a perfectly legitimate way of leveling up, and I think designers need to stop trying to enforce their own ideas about what makes the game fun onto players. What do you care if somebody wants to kill goblins for ten hours instead of horned devils for two? Maybe they just aren’t very good at the game. Maybe their friends are a few level behind them, and they would rather play with friends than push against the limit of their abilities. Maybe the player just wants to explore the world you’ve crafted and backtrack over low-level territory. Maybe they just really like fighting those Goblins. If it requires effort, they ought to be getting some sort of positive feedback. When the fat zero appears, you are sending a message to the player: You’re doing it wrong. Figure out how we intended for you to play the game and do that.
I find “tightly leveled” games to be infuriating. Fight something two levels below you, and the game gets tight-fisted with the rewards and punishes you for not constantly risking death to proceed. Fight something two levels above you, and die. Suddenly there is a very limited supply of appropriate foes for you to tangle with. At this point they might as well make the game linear. Why give the illusion of freedom when there’s only one area of the gameworld in which the player can meaningfully operate?
Loosening the levels of a game so that the player can meaningfully fight a wider band of monsters lets players set their own pace and choose their own preference for risk vs. reward. It opens things up for more casual types, is more newbie friendly, and encourages exploration. And the downside? Say, what is the downside, anyway?