GB Feature: Hinterland Review
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You will find a lot of equipment on your adventures, though you won't just pick up items for your character. A lot of the items you'll find will go into decking out your followers: oats to help herders, tools or hammers to help craftsman, salves or bandages to help doctors, and so on and so forth.
As you level up, you get to pick one stat to increase (attack, defense or health) and then get an extra perk, that gives a bonus of different sorts to your offensive skills (such as a bonus to offensive value or attack speed), your defensive skills (such as enabling you to heal outside of town) or your town management skills (such as giving extra gold from buildings, allowing you to research quicker or build cheaper).
Individual level-ups might not give noticeable boosts every time but it has a cumulative effect, and you'll find your character shaping up in giving special emphasis on his individual adventuring skills or to town management. I've had a playthrough with a dwarf warrior where most of my gold resources came from adventuring, and equally a playthrough with a goblin scientist where most of the production came from the town.