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Destiny's Year One is about to leave behind levels associated with your gear. Game Informer says it well:
Players earn XP by killing monsters, completing missions, and turning in bounties, as has always been the case, but that experience now feeds directly into your level progression all the way from 1 to the new level cap of 40."
The article also touches on a revision to the loot-drop system: it will now check your existing gear so you won't keep seeing repeats and more. (Thanks Speed.)