Medieval Realms has a built in Experience Point system. XP is earned (and lost) in a variety of ways.
Experience Point are earned passively via survival time. Both players playing in PVE mode and those who choose to play in PVP mode earn passive XP at the same rate.
You can also earn additional XP by dispatching bandits and destroying the undead. When playing in PVP mode you will earn twice as many XP incremental points as opposed to those playing in PVE mode.
In addition to killing bandits and purging the world of the undead you can also gain XP by killing dangerous animals.
Those playing in PVP mode can also get more XP by killing other PVP players.
Finally, XP is also gained by finding gemstones.
In Medieval Realms it is possible to loose XP as well as gain it. You will loose XP every time you die. So try not to!