One thing I really love about oldschool D&D, and which changing was a major flaw of the d20 system, is that nonplayer humanoids have fixed stats like monsters and don’t have levels like PCs. That’s not just orcs and gnolls, but also dwarves, bandits, and berserkers. Not only is this really convenient for GMs who have a lot less work to prepare for a session and can simply pull stats for any minor NPC out of the book if an unanticipated fight breaks out, it also brings with it a number of very interesting assumptions about the world and the position of PCs in it.
I have adopted the policy that every NPC too minor to get a name in advance is automatically a level zero NPC. Which means effectively all guards, soldiers, bandits, and civilians. Named NPCs have to be significantly more skilled in combat than the average soldier to become even 1st level fighters or amazing skills to have levels as scouts (fighter-thief) or specialists (thief). In such a setting a 1st level fighter is clearly a Veteran and a 4th level fighter a Hero. And of course that’s what Gygax and Moldvay intended when they put these titles next to these fighter levels. 1st level PCs are not raw recruits and 5th level characters not “low-level”.
I’ve started to get the impression that high-level characters (level 13+) were flawed pretty early in my 3rd edition days and I’ve recently seen people make good arguments that these have been tacked on later in a somewhat haphazardous way and were not part of the original design that quickly ran out after 9th level. But it’s something that is relatively easily ignored, at least until Forgotten Realms became the de facto official AD&D setting going into 2nd Edition. Forgotten Realms had this odd thing going on where high level NPCs are numerous and make their homes in quaint unassuming villages or go into semi-retirement to run a tavern. Which I can see as having some charm, but becomes a really bad influence when it’s taken as a precedent. If there are level 15 or 20 NPCs found in farming villages, what’s the point of 2nd or 6th level PCs other than being errand boys? 4th level is no longer heroic and 8th level most certainly not super-heroic.
So simultaneously you get monsters becoming stronger to compensate for 10th level being the new 5th, which leads to the really annoying consequence of players having to wait until they’ve run enough rat and goblin errands to get to the cool stuff of giants, dragons, and demons. Which in twelve years of playing 3rd Edition and Pathfinder never happened to me once. Aside from the one time we started with 14th level character’s I only encountered a beholder once (last session of that campaign) and not a single dragon or demon. So lame.
One common argument I come across for the need for high-level NPCs and mid-level town guards is the question of what would prevent the players from burning and looting villages. To which I have one really simple answer: Nothing!
So the players want to fight guards that can’t stop them and plunder the local stores for anything valuable? They want to become villains terrorizing the countryside? Let them. But that doesn’t mean you have to let them get away with it. Because what do villagers do when being under constant attacks by raiders with supernatural powers? The only thing that can defeat a Hero is another Hero! They call for heroes to save them. It doesn’t need to be Rocks Fall, Everyone Dies. You can start with a party of 3rd and 4th level NPCs. If the players defeat them others will trie, until eventually they become infamous and feared enough that armies a send to deal with them and then 8th level parties consider them a worthy task for themselves. If the players keep defeating them, they are certainly going to have a blast with it. And everything is good.