Well-implemented, this will give a game added depth and customizability, or allow players who might not be as good to spend a little time leveling up to make the game easier, creating a roundabout way of introducing Difficulty Levels to the game. Badly implemented, it seems like tacked-on attempt to appeal to a broader demographic, or be seen (critically) as a better game. Seems to occur most often in FPSes, strategy games (usually Veteran Unit), sports sims, and the occasional Fighting Game, especially those that allow you to build your own character from the ground up.