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Participating in a turn of a fight, be it by striking, healing, or applying status effects, rewards the fighter with experience points. When their experience gauge is full, a fighter will level up, recovering all lost health and gaining a 0.24% boost to damage, defense and health. Other stats, such as self-healing, are unaffected, therefore making certain units more useful at lower levels. Damage (and in the case of cupcakes, healing delivered) is also increased by a flat number. Delivering the killing blow rewards 120 bonus experience points (60 in the case of half-slotters).
The amount of xp needed to level up is exponential. Level caps at 99, but experience points can still be acquired to fill up the bar, which will reset it and grant the unit the health recovery bonus.
Experience is not gained in the PVP arena.