I recently had the pleasure of completing what I consider to be one of the more innovative RPGs of the 8-bit era - Final Fantasy II. Despite being a dedicated fan of the franchise, I had avoided playing through its second official release until just recently due in part to the stigma surrounding the most controversial aspect of its gameplay - the exclusion of character levels. This design choice was both a bold step forward for the series and an ostracising change that left most players viewing the title as little more than the series' black sheep.
Unlike the original Final Fantasy or those to come after, Final Fantasy II excluded the experience-based leveling system that most players have come to expect form pretty much all RPGs. Instead, each chracter in your party develops based on the actions they perform. Characters that use a certain type of weapon will become more adept at wielding it over time - improving their combo-rate, accuracy, and power (Final Fantasy XIV actually uses a similar system). The same can be said for magic; the more a spell is used, the more powerful and flashy it becomes. Because chracter progression is also based on use, character stats (HP, MP, attack power, intelligence, spirit, stamina, etc.) are typically augmented based on how often they enter the fray of battle. For instance, max HP improves after a character sustains massive amounts of damage in a battle and max MP improves providing you cast a ton of spells. Essentially, every aspect of what makes your character who they are is based on use. While there definitely were some unintended consequences to this system (many player would make their characters attack each other in order to extensively improve HP and stamina), I totally dug the system because it created a legitimate challenge for the player and to me was a refreshingly unique concept.
It's become apparent to me that skill/character progression systems in contemporary RPGs have started to stagnate. Far too many games on the marketplace today are willing to simply insert you into a battle, assign you experience or attribute points, and either level you up automatically or allow you to assign attribute points yourself. Not only are these progression systems linear, but they typically commit the crime of presenting the illusion of choice. Final Fantasy X's Sphere Grid can act as a prime example of this. To the player there appears to be a world of choice in terms of which attributes you can unlock, skills you can attain, or alternate grids you can gain access to, but when you actually look at the untangled Sphere Grid, it becomes apparent that you never had much choice at all (an aspect that the developers tried to rectify with the International Version). Final Fantasy XIII did the same thing with the Crystarium, but was far more blunt in its linearity. This begs the question - is this lack of innovation hurting the overall experience?
I suppose, where many RPGamers are more focused on a title's story, I can't really make the partisan statement that contemporary RPGs are made worse by this lack of ingenuity. I can, however, cite some previous RPGs that I found to be more engaging to due to a robust skill/character progression system. The first Grandia benefited from co-opting the use-based skill progression system of Final Fantasy II while also applying the more traditional level-up system to stat progression. The players had the freedom to focus on improving only the skills they used on a regular basis, but the overall character growth would still occur at set intervals. Grandia II took things a step further by assigning the player skill and magic coins at the end of each battle that they could then apply to whatever skill or spell they wished to improve - regardless of whether they have actually used it or not. In my opinion, this represents both the ultimate freedom and a safety net in character progression; characters don't improve their skills and abilitiesin a linear manner, but the player also has the knowledge that their base statistics will remain solid providing they enter enough battles. Lastly, Final Fantasy VIII also featured a robust system of freely altering character stats and proficiencies. By junctioning a multitude of drawn magic to specific character dimentions, you could ensure that your characters were at their peak condition regardless of their level. In fact, the leveling system in this title was only used as a means to keep enemy difficulty in check
At the end of the day, I suppose I would just like the designers to take a step back and ask themselves if they're retreading old ground with their leveling systems. If we don't try new things, regardless of whatever unintended consequences might occur, this aspect of RPGs will continue to stagnant and likely won't make future titles any more engaging.