Hello! Don't worry, this isn't dumb, considering how most players are used to the leveling systems in the main titles.
Firstly, being underleveled in chi will not bring too much of a problem, because our strengths depend on our cards and Keyblades. It is true that even if you are at a high level, without any cards, you can hardly even survive from a Shadow. If you mean you want to get stronger, focus on building your deck and strengthening your Keyblades (we have a Beginner's Guide which provides advices on this part).
Of course, leveling up is important too, in that it increases your deck's cost limit (every card costs some capacity; the rarer the card, the higher the cost), which allows you to add in stronger cards. In addition, you may also want to level up to fully replenish your AP and BP. In this case, you could try fighting the Fat Bandits as they give the most EXP AP-wise. Leveling up also slightly increases your HP, too, but don't take that seriously since the amount is too insignificant to support you. There are also rewards for reaching a particular level, as well as some missions (correct me if I'm wrong).
If you have anymore questions, feel free to ask at the walkthrough thread here .
Also, I'm sure you know your own strength, but it's got to be said just to be clear: the last few events have been kind of skewed. Those Fire Plants and Ice Plants? Out of everyone's league. Lv 777 Neoshadows: forget about it.
If you're having trouble with the Weed Plants or were having trouble with the Lv 222 Neoshadows, that's a different matter. Quintus' advice will help you no matter your situation.