A foreword: We could spend all day arguing whether a Scopedog would beat a Gundam in a fight but that is not the intent of this post. I am using well known classic Mecha as representatives of each Power Level but that is just my personal opinion of them.
Power Level 0
Models not to scale.
At this Power Level the Mecha are made of paper mache. Getting one or two good hits in will blow up almost anything, Extreme Terrain is a Squad-wiping hazard, and giant robots have to watch out for things like planes, helicopters or tanks that would usually be chaff.
The gameplay revolves more around positioning and trying to not get hit at all rather than overpowering your foes, because numerical advantage can and will make mincemeat of the Pilot. Beam Weapons are way too expensive to be worth it, but you do want a Shooting Weapon that you can use with Reversible Thrusters. A Support user can be invaluable because of their ultralong range strikes against Enemies with very low Threshold. Restoration Upgrades are just too slow or expensive to get much done, but Stealth Field is a godsend.
Overall it is still Battle Century G, but a superfast and more positioning-based version of it. It should make for a fun couple of games, though something like one third of the game's abilities are too expensive to be convenient, so I'm not sure it can sustain a long-term campaign.
Power Level 1
Still pretty firmly in real robot territory.
This is the recommended starting point for beginners, in which Mecha are closer to representing what we know as the giant robots of Main Characters. Level 1 Mecha stand out from their Level 0 brethren by having one or at most two special abilities going for them, and having superior performance otherwise. Combat at this Level is still pretty fast and decided by one or two super swings, but you can now take on Level 0 mooks who have the numerical advantage as a fair challenge without being terrified they might roll a 10.
You can specialize rather than generalize at this level but it will leave you with obvious weaknesses like having low Might or Speed. Energy-wise you can do anything but not everything, and can distinguish your Mecha with a special barrier or strong beam weapons. You could get both things if you feel like spending your entire Power Level's worth there, but that's as far as it'll get you.
Overall it represents basic protagonist Mecha fairly well, they are a tad similar stat and loadout wise outside that one Power Level of XP in tricks they spent, but at least you have Genre Powers so you're missing out on a lot less. Power Level 1 is meant to be an introductory Level where you still have to pay attention to things like Terrain and positioning, but it takes more than one mistake to ruin your day.
Power Level 2
World-Destroying Superweapon sold separately with Power Level 5 Expansion Pack.
Eventually you'll grow out of Power Level 1 into Power Level 2, or you'll just start there because you've got more toys to play with that way. This is the Level where the game begins to shine, where Boss-type Enemies can show up and Threshold goes higher than what one superattack can take out.
Your Mecha can now afford to cover their weaknesses or to uber specialize in something. If you are not using Beams, you should consider getting Weapon Specialization to remain competitive. Support Mecha get access to enough options they can start getting tricksy with chained Supports. Transforming or Combining Mecha don't lose out on too many points. Generally way more strategies are viable.
Overall this is probably the game's sweet spot with the least amount of weird idiosyncrasies. If your Mecha is just a fighter without many tricks up its sleeve, then this is the point of the game where growth slows down. Attributes are still cheap and you want as many as you can get, maximizing performance without diversifying. This is representative of most arcs where the main character has to learn to make the best of their giant robot and the GM starts to get creative with the challenges thrown at them.
Power Level 3
Here There Be Supers. Yes, I just called Gundam ZZ a super robot.
Power Level 3 is much like 2 but bigger, badder and better. Individual Mecha can go toe to toe with Miniboss enemies without help from their allies, are effectively playing Dynasty Warriors with all the mooks around, and have enough choice in Genre Powers to start thinking of combos.
You can effectively take on multiple roles now. Snipers can also be Support users while Duelists can put Restoration or Stealth Field to use. Beams get particularly attractive now, because you have enough XP to make the best of them with an efficient stat spread and also get Active Defenses.
This is the game's other sweet spot in my opinion, and the expected endpoint for games that start at Power Level 1. After this it is almost a different game. The late game Power Level issues that become more pronounced still haven't taken over.
Power Level 4
If you thought super robots defeating entire armies was silly, you haven't seen a Newtype push back an asteroid.
Combat is slow because of inflated Threshold values and all the defensive Upgrades running about. Expect battles at this point to be about who has more tricks up their sleeve. Weapon Specialization's barrier-negation ability is a gamewinner here since you can repeat it indefinitely. Halving Attributes is also very effective if you can do it repeatedly, as it should be a 3-4 point swing that lasts a whole Round.
Attributes are too expensive now to effectively keep buying them, but at the same time there is not much else you can do to diversify, so might as well go along with it. You might want to consider having backups for your most important abilities. For instance you could have Absorbing Armor to increase your Guard by 3 for 'free' a decent percentage of the time, or a Reactive Booster in case your Custom Defenses get disabled.
This Power Level is recommended as an endgame point for the most part, because the gameplay shifts dramatically. Beams are much more effective than their physical counterparts when there is this much XP to spare. Terrain is a non-factor because you ignore it on demand and cause its effects through Upgrades or Weapons when it would matter.
Power Level 5
Models very, very much not to scale.
This is Power Level 4 but taken up to eleven. You can get away with pretty much anything you can think of since you are bleeding XP. You can face multiple Bosses per Operation and they're all just as brutal as the PCs themselves. You want Beam-based Damage-per-Turn tactics to gun them down with quick focus fire or teamwork-based burst Damage based on Synchro Attacks and You can do Better than That to put them down ASAP.
It is similar to Level 0 in that it is better reserved for one-shots or short campaigns. Non-Beam Weapons just aren't competitive at this point outside of the rare megatank build that spends its energy shielding the team or healing itself. You want either ultra offensive glass cannons backed up with a single unit that can use Restoration, Support or Stealth Field. It is kind of repetitive.
It does represent Mecha fiction fairly well though. Of course they would laugh at Extreme Terrain, though that is frustrating for Support characters that were using it as a way to deal Damage. Of course they fight shooting death lasers at each other, but that makes half the weapons in the game ineffective choices.
We are on the Same Level
There's a lot to be said about balancing stuff around Power Levels, and each one of those paragraphs could easily make a full post of its own. Generally speaking the game can be divided into three categories (Levels 0-1, 2-3 and 4-5) and most of the rules were made with the intermediate Levels of 2-3 in mind.
Beam specialists have a hard time during Levels 0-1 because they are one-trick ponies beaten by a single Active Defense but dominate the game at Levels 4-5, and Fire at Will goes from ultralong range guaranteed Damage to a laughable nuisance. I don't know how much of this is a bug and how much of this is a feature, and I want to find out through real game experience rather than theorycrafting and simple playtesting.
Some things could be better though, and I will be taking steps to correct that. Experimental Reactor's bonus could be a little less aggressively priced. Likewise Chaindblade, Airstrike and Interference Bomb could all use the full Tension bonus instead of just one half of it. Electromagnetic Detonator could likewise stand to be more effective at its job, losing the area of effect and incorporating a 'burnout' effect like that of Cool your Jets. Fire at Will is a sketchier issue, but it could use a slight buff too, like incorporating Tension into the DN.
What about Weapons? It all comes down to Beam Weapons being more expensive and having an Energy cost. If they were to Cost 5 and didn't have that innate Advantage they would be more comparable throughout the course of the game. Why not make everything cost 10? Because at that point having any kind of weapon diversification really, really hurts - it basically becomes impossible to try and stat out existing Mecha of low Power Levels. We could keep some Weapons with a cost of 5 and some with a cost of 10 (spread out between Beam and non-Beam) but that would bring us back again to some of them being fundamentally weaker.
As always, let me know what you think.
Edit: I forgot to bring up Attributes. Those could also be priced differently too, but that is honestly more of a topic for a post of its own.