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Last Remnant is a pretty good game.. its confusing at first and how they level up well..

If you use a lot of physical attacks then you will only level up physical stats and gain new attack commands.

its the same with spells, attack with magic attacks in battle and you will level up magic stats and gain new ones.

You will also have to learn to use formations as these help you in battle.

Sadly the game doesn't really tell you much in how to play I guess its just learn as you go along..

 

I agree with the enemy level scaling being strange.. not all enemies scale up.. some monster you encounter really early on in the game get really strong as you level up and return to them.. others just seem to just stay the same and become easier as you level up your battle rank.