What does leveling up you neopet do?

Answer 1

Leveling up your neopet increases the cap of how far you can train its other stats (such as hit points or defense). At certain levels, you also unlock the ability to gain new faerie blessings.

Answer 2

Leveling up your Neopet increases its stats, which can make it stronger in battles and better at certain activities like fishing or cooking. It also unlocks new abilities and allows your Neopet to wear certain items or equip weapons.