Level Caps are values set at birth representing how high a person's level can get. Levels increase endurance, strength, magical ability (if proficient) and other things, so a high level cap is numeric representation of having high potential. They are inherent in almost every living being with a Soul that is tied to the Planner Scenario. Beings with Souls that come to The Continent from elsewhere, such as Kentarou, are not born with a level cap, but gain one upon entering the Continent and keep it for the rest of their lives.
The average citizen has a Level Cap between 5 and 10. Having a cap of 11 to 19 means you have decent combat potential but nothing noteworthy. Having a cap of 20 or above is the equivalent of being first in your class and is the ideal range for most soldiers and adventurers. Caps of 30 or above are seen only once every 10,000 people and are generally seen as the minimum range to achieve a high standing in an army. Caps of 40 or above are seen once every 100,000 people and signify a person as having the potential to become one of the strongest people in the world.
Almost every creature with a Soul within the Planner Scenario has a level cap. This being said, there are multiple exceptions and oddities:
Rance is an anomaly in that he has levels but was born without a level cap. His offspring inherit this rare condition as well.
Athena 2.0 is an artificially made creature, so she has no levels at all.
Insects (creatures created from flakes of the 4 holy animals such as doggies and cows) don't have souls, so they don't have levels.
Devils and Angels do not have levels or level caps, due to being outsiders of the Planner Scenario. This no longer seems to be the case, however, as both Rance 03 and Rance X feature devils gaining levels, though it is still unclear to what degree they follow the rules of the setting otherwise.
Hunty Kalar was considered to not have either levels or skill levels at the time of Rance IX's release, with the explanation being that she is no longer being recognized as a part of the Planner Scenario. This is no longer the case as of the release of Rance X, where she is once again given both.
Ladle Man bizarrely lacks both levels and a cap, despite appearing to be human.
Level caps are determined at birth and generally remain throughout a person's life. On occasion, however, Level Gods will raise a person's cap by a small amount in exchange for completing a task for them. Alternatively, certain items can be found that can also increase a cap, though they are extremely hard to come by. One of Rance's many strange and amazing abilities is that he can slightly increase the level cap of a person if he sleeps with them after they have reached their original cap, though the increase is only temporary and will disappear if he does not do so consistently.