This part has driven me nuts, there’s no real information in game other than looking at scrolling damage numbers to figure out how the math works. Opted to write a single post on this, rather than in another.

Every item has an info screen that resembles the screenshot above. The key pieces:

1. The type of item, and rarity. The type impacts how it’s used, rarity impacts other stats (higher is better).
2. The attack/defense is only relevant to the level. All level 1 weapons have 100 ATK. For such a big piece of the visual, it’s actually meaningless.
3. This is the actual damage you will deal, and it’s relative to other items at the same level. A level 1 musket will deal more damage than a level 1 pistol.
4. The level of the item. This is the stat that is the least understood but actually the most important.
5. The icon is the main stat of the item that boosts damage (Perception in this image) and the letter (A for this one) scaling of stats to raise damage. It takes about a dozen perception points for an A weapon to equate to 1 item level. The scaling improves as you improve the rarity of an item (rare, epic, legendary).
   • More explicitly here, if you have a B or C scaling item, you are better off putting your stats into stamina/vitality than any other option.
6. The extra effects of an items. You get 1 for a rare item (blue) and 2 for an epic item (purple).

Right, with that, what actually matters? Enemy level vs. Item level. That’s about it.

It’s nearly 15% difference per level delta, which scales in logarithmically. 1 level is 15%, 2 levels is 25%, 3 levels is 32% and so on, with diminishing impacts.

If you have level 3 gear and you are fighting level 5 enemies, you’ll be down nearly 25% across all stats. You will absolutely feel this when you enter a new zone, as you’ll generally be 5 levels lower than enemies. The Alpha Wolf that 1 shots you the first time you meet them, will at most take off half if you are evenly matched.

How does this apply to item groups:

• Armor: The average level of all your gear is your defence level. 5 pieces of gear, it gets expensive. You will need a lot of flax (cloth) and hides (leather).
• Weapon: The level of the individual weapon, even if you are dual wielding a pistol.
• Ship: The level of the item itself. This applies to cannons, keels, and boarding gear.

How should you prioritize? The sort of good news is that item upgrades are somewhat exclusive per type. Level 1 to 5 you can get the items in the wild. 5+ you need to buy material with piastre, which is primarily had from ship battles with pirates and selling loot. I would recommend upgrading your weapon first, and then equally upgrading your armor (e.g. get them all to 5 before making a level 6 item). For ships, this depends on your variant and gear but for the most part should be balanced between canons and keels – dying on a ship is so much worse than dying on land. Boarding gear is only needed for boarding, and in 99% of cases outside of specific quests, you’re better off sinking the ship instead.

Quick notes on rarity (or called ascension in-game). Armor should not be upgraded to epic or beyond. Weapons, that depends on the added effect, and in most cases this is worthwhile. Ship items, you should upgrade anything other than Perfectly Ordered (+aim speed, wth?) or Tempered Cannons (+20% dmg if hitting the rear of a ship).

The first island is normally good enough to get all items to level 5. You will want to find an island in the 2nd zone that has an iron mine near the coast and set a Bell teleport nearby. That will give you iron, hardwood, flax and more hides with minimal trekking.

To me, this is more of a tutorial type of thing combined with an updated UI, so that players understand how these mechanics work with each other. There are bit too many variables and no real indication as to how they actually work in-game currently, which is normal for EA.

Hopefully this helps folks understand why the are getting absolutely wasted by higher level enemies. Upgrade to the max level and the game gets a whole lot smoother.